The last quarter of 2011 saw almost 35,000 buy to let mortgages advanced totalling £4 billion, over 15,000 of which were re-mortgage advances.
The figures are almost identical to volumes for the third quarter of 2011, 34,300 advances with a total value of £4 billion, but considerably higher than the last quarter of 2010, 26,300 advances valued at £2.9 billion.
Buy to let figures are still operating at muted levels when compared to the third quarter of 2007, where 93,000 advances were made at a value of £12.7 billion, but clearly buy to let mortgages are continuing to recover from the lows experienced in 2009.
Buy to let mortgages represented around 11 per cent of the total gross mortgage lending during the last quarter of 2011.
Paul Smee, CML Director General, commented:
"Buy-to-let lending continues to perform well. Demand for rented property remains high, so the rationale for buy-to-let remains strong, and there is little reason to foresee any change to this positive outlook for the sector.
These figures do not suggest that buy-to-let is crowding out first-time buyers; more that it is performing a really important role within the overall housing market. The benefits of the availability of good quality, private rented housing should not be overlooked, especially as there are many households which need the flexibility and mobility that the private rented sector is well placed to provide."
Robin King, director, Move with Us, also commented on the figures:
“The buy-to-let market is steadily growing relative to other parts of the market, such as first-time buyers, but we believe it still has a long way to go before it booms. We estimate that it needs to grow by around 50% over the next five years otherwise rents will escalate further.”
“The tightening of mortgage lending since the financial crisis has enabled professional landlords to step in and grab market share by taking advantage of lower property prices, reduced interest rates and the increase in tenants to rapidly expand their property portfolios. In the current climate, investors should be looking for a rental yield of around 5%. To achieve this they need to work harder to attract the right tenants and to be able to demand high rents.
“Tenants are demanding higher quality homes with good amenities and transport links for very competitive prices and have the luxury of more properties to choose from. Professional landlords should be looking to invest in areas where we are likely to see high economic growth this year as increasing property prices tend to follow. Areas with good rail routes are becoming popular. The new HS2 planned line, although some way off, could also create good opportunities.”
Don Maclean at The Mortgage & Insurance Bureau added: “The buy-to-let market remains buoyant and our mortgage advisers and colleagues at Gibbs Gillespie should be pleased to advise existing and potential landlords on the best options open to them in terms of both rental income and capital growth.”
