If you're considering buy-to-let property investment in the UK, now is certainly a good time to do it. Figures from the Council of Mortgage Lenders (CML) have shown lending to landlords is increasing, with 40,000 mortgages advanced by lenders in the UK in Q2. This equated to GBP 5.1 billion in lending, with both the number of buy-to-let loans and value of mortgages the highest since the third quarter of 2008.
With many Britons now priced out of being owner occupiers, the rental market has gone from strength to strength in recent years. Indeed, the sector has been recovering strongly since the financial crisis. However, this has taken place from a low base.
Overall in Q2, the number of loans advanced was 19 per cent higher in volume and 21 per cent higher by value than in the preceding three months, when lenders advanced 33,500 mortgages worth GBP 4.2 billion. Buy-to-let lending was up 19 per cent year-on-year and 31 per cent higher by value.
During the second quarter of the year, lending for house purchase accounted for around half of all loans, increasing 15 per cent by volume and 19 per cent by value quarter-on-quarter. However, remortgaging has also become more popular, with an increase of 24 per cent by volume and 29 per cent by value over the same period.
Jackie Bennett, CML's head of policy, said: "Strong rental demand is contributing to the continuing expansion of the buy to let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages. These conditions are creating more opportunities for landlords to remortgage, as well as helping to fund increased activity in the mortgage market more generally."
However, as lending levels increase, so too are prices, leading to fears many will continue to be priced out of the market in future. Fitch has also indicated a house price bubble could loom around the corner, thanks to Help to Buy. In London, the market is particularly showing signs of overheating.
- Tuesday 13 August 2013