Buy-to-let at four year high

Buy-to-let at four year high

Gross buy-to-let lending was up 19% from 2011 to £16.4 billion, the highest level for four years.

Buy-to-let lending accounted for 11.5% of total gross mortgage lending in 2012, up from 9.8% in 2011, according to data released today by the Council of Mortgage Lenders.

Over the last quarter there were 36,700 buy-to-let loans advanced, worth £4.6 billion.

This was up from 34,200 loans worth £3.9 billion during the last quarter of 2011.

This meant a total of 136,900 buy-to-let loans were advanced during 2012.

CML director general Paul Smee said: "Buy-to-let is benefiting from strong tenant demand, which is likely to continue.

"Loan performance compares favourably with the owner-occupier sector, and the overall outlook for the buy-to-let sector is positive.”

Stuart Law, Chief Executive of Assetz, said: "This is just the start of a continued rise in BTL lending which we expect to finish the year up a further 10-20% on 2012 figures, underlining a third year of growth.

“This is a reflection of the realisation of many people that buy to let provides an instant and reliable income and the increasing demand for rental property from solvent tenants is giving greater confidence to this sector."

Despite such a strong buy-to-let market rents fell to the lowest since July 2012, according to the latest Buy-to-Let Index from LSL Property Services plc.

Six regions saw rents decrease on a monthly basis with the average rent in England and Wales falling by 0.3% in January to £732 per month.

David Brown, commercial director of LSL Property Services, said: “An improving mortgage market in January helped take a little pressure off the limited supply of rental property, at a time when the demand from tenants on the move is far from its seasonal peaks.

“But the dip in competition is not likely to last long. The pace of the fall in monthly rents has slowed, and we’re already seeing tenant activity pick up.”

The total annual return on a rental property stood at 5.7% in January. This represents an average return of ï¿¡9,369 with rental income of ï¿¡7,840 and a capital gain of ï¿¡1,529.

Despite the seasonal drop in rents, the average yield on a rental property was 5.3% in January, compared to 5.2% a year ago.

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