New buy-to-let lending in the first quarter of this year totalled £3.7 billion (32,300 loans), according to the Council of Mortgage Lenders.
While 32% higher than in the first quarter of 2011, buy-to-let lending is still only around a third of its 2007 levels.
Landlords are cashing in at a time home-buyers are struggling to get on the property ladder. An increasing number of would-be buyers – especially those looking to buy for the first time – are still renting, as lending criteria remains strict and deposits high.
However, the CML figures also revealed that the number of advances for purchases in the first three months of the year was 17,190. This is up 29 per cent on the same period last year – but has slipped back 8 per cent from the 18,730 in the final three months of 2011.
The average maximum loan-to-value available from lenders on buy-to-let mortgages remained at 75% in the first quarter of the year, with the average minimum rental cover 125% – up from 123% in the previous quarter, but otherwise the same as for nearly three years.
In terms of loan performance, the number of buy-to-let mortgages in arrears fell a little in the first quarter of 2012, and the arrears rate on buy-to-let mortgages continues to be lower than in the owner-occupied sector.
Richard Gordon of UKPI commented: “These latest figures show that Landlords and investors continue to believe the private rented sector has potential for growth. Tenant demand remains high and there is real potential for capital growth over the longer term, particularly in London and the south-east.
“We are also receiving increasing demand from institutional investors, such as pension and investment funds, with large cash sums to spend, who are looking for entire blocks. I don’t foresee any slow down in the appetite for residential buy to let investment over the coming months.”
Also commenting on the latest results, CML director general Paul Smee said: “Even though buy-to-let lending is running at only around a third of its peak levels, the sector is continuing its gradual expansion. It has become an important part of the overall landscape of housing provision in the UK.”Source: Council of Mortgage Lenders