Finance News

Buy-to-Let Mortgages on the Rise

Em Morley - August 13, 2012

Buy-to-let mortgage numbers continue to rise, as landlords look to cash in on favourable interest rates, rising property prices and uncertainty within the housing market.


Paul Smee, Director General of the Council of Mortgage Lenders (CML), said: “Buy-to-let is continuing to show signs of recovery and growing broadly in line with expectations. The rental sector has grown strongly in the past decade or so and buy-to-let continues to help deliver a wider choice for tenants.”[1]

Buy-to-Let Mortgages on the Rise

Buy-to-Let Mortgages on the Rise


However, the CML was quick to point out that despite growing numbers, lending volumes remain only a third of what they were during their peak of 2007.


LSL Property Services, which owns Your Move and Reeds, conducted a survey that found the average month-on-month rent prices increased by 0.9% in June. This means average monthly rents across England and Wales are now £718 and have increased for the third consecutive month.[1]

Chief Property Economist at Capital Economics, Ed Stansfield, describes buy-to-let lending as a, “key prop” for the entire mortgage sector.

In addition, Stansfield says: “Landlords are typically less credit-constrained than first time buyers, meaning there is likely to be a steady demand from frustrated buyers for property in the private rental sector.”[1]

Mark Harris, Chief Executive of leading mortgage broker SPF Private Clients, indicated that fairly strong rental yields were attracting people in the buy-to-let sector while the housing market is stagnant. Harris said: “While capital growth on investment properties is likely to remain subdued for some time to come, income is strong and returns favourable when compared with other investments.

“Buy-to-let is only going to grow in popularity as more lenders return to the market.”[1]


Encouragingly, CML’s figures indicate that despite growing squeezes on household budgets, buy-to-let arrears have fallen slightly. Borrowers more than three months in debt declined from 1.69% in March to 1.56% in June.[1]

The number of repossessed buy-to-let properties remained constant at 0.12%.[1]