The number of properties being bought with buy-to-let mortgages increased by around 84,000 in 2011, modestly helping to increase the supply of private rented housing in the UK, according to latest data from the Council of Mortgage Lenders.
During the fourth quarter of 2011, a total of 34,800 buy-to-let mortgages (of which 15,600 were remortgages) were advanced, with a total value of £4 billion. This was virtually identical to the volume of business in the third quarter (34,300 loans worth £4 billion) but up on the fourth quarter of 2010 (26,300 loans worth £2.9 billion).
Compared with the height of the market in the third quarter of 2007, when quarterly lending totalled over 93,000 loans worth £12.7 billion, the buy-to-let market continues to operate at relatively subdued levels, but it is clearly continuing to recover from its low point in 2009.
Buy-to-let mortgages account for nearly 13% of the total outstanding value of mortgages in the UK, and buy-to-let lending represented nearly 11% of total gross mortgage lending in the fourth quarter of 2011.
The arrears performance of buy-to-let loans is better than the owner-occupier market, but the repossession rate is higher. This should be no surprise. For obvious reasons, lenders make particularly strenuous efforts to show forbearance over sometimes very extended periods to home-owners to try to help them keep their homes wherever realistically possible. This is a less marked imperative in the buy-to-let sector where greater fluidity over shorter timescales is normal. Provided the landlord has a bona fide buy-to-let mortgage and tenancy is recognised by the lender, the tenant's rights are unchanged even if their landlord does default.
Commenting on the latest data, CML director general Paul Smee said:
"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."
MM6 – Buy-to-let market summary
MM17 – Buy-to-let gross advances
AP5 – Buy-to-let arrears and possessions
AP7 – Comparison of arrears in the buy-to-let and wider mortgage markets
AP8 – Comparison of possessions in the buy-to-let and wider mortgage markets
NOTES TO EDITORS
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.2 million mortgages in the UK, with loans worth over £1.2 trillion.
2. The CML buy-to-let press release for the first quarter of 2012 will be published on 10 May 2012.
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