Buy-to-let lending increasing in spite of warnings

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by Kay Murchie

Information published this week for August mortgage lending showed strong property investing was supporting the market with the other lending category covering buy-to-let up by almost 40% compared with the same month in 2006. The figures show that buy-to-let investors continue to leap into property in spite of warnings that the market may have reached its limit.

According to the Council of Mortgage Lenders (CML), £7.8 billion worth of loans were taken out under the other lending heading in August, accounting for nearly 25% of the total £34 billion borrowed during the month.

Total lending has been maintained by a strong buy-to-let market said CML. Other lending was 37% higher than in August 2006, and has been consistently higher than its comparable 2006 figure throughout 2007.

This relates largely to the buy-to-let area which has continued to be underpinned by house price rises, rent increases and tenant demand.

Many analysts had predicted a downturn in the market and that confidence would be knocked but the figures show otherwise. Warnings of a downturn have been the topic of concern throughout 2007 and have heightened since last month’s crisis at Northern Rock.

Finally, Chancellor Alistair Darling cut the rate of capital gains tax this week which will also help buy-to-let landlords who have made good profits over the last few years.