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Buy-to-Let Lending on the Rise

Before the collapse of Northern Rock and the global financial crisis the UK buy-to-let market was booming. Landlords were rapidly expanding their portfolios and there were an abundance of willing tenants.

As soon as the banks hit difficulties, landlords stopped investing in further properties and the banks withdrew much of the lending that landlords needed if they did want to expand their property portfolios. These factors resulted in the UK buy to let market remaining stagnant since 2008.

In the last few weeks The Council for Mortgage Lending has released their annual lending figures. The figures show that the total number of outstanding buy to let mortgages jumped to 1.4 million last year. This means that 13% of all mortgages fit into the ‘buy to let’ category. The CML figures also show that gross lending for buy to let mortgages rose from £13.8 billion in 2011 to £16.4 billion in 2012. That’s an increase of 19% in just one year.

Since the release of the figures there has been a lot of speculation about what might be causing such a dramatic rise. One of the major factors is the huge demand from tenants. Due to the high property prices and reduced availability of mortgages for first time buyers in recent years, many people, who might have otherwise bought their first house, are looking to rent. An increase in the number of people wanting rent property has meant that it’s easier than ever to fill a buy to let property. What this demand also means is that landlords are able to charge higher rental rates on their properties.

Another major factor which is influencing more landlords to expand their portfolios is the government’s funding for lending scheme. With a greater choice of mortgages and a greater availability of capital, landlords are able to increase their portfolios with much less risk or expense than a couple of years ago.

The ‘buy to let’ market is clearly in very good health in 2013. Let’s hope it continues and that it prompts movement and growth in other areas of the UK property market.