Buy-to-let lending shows resilience

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by Gill Montia

The Council of Mortgage Lenders’ (CML) latest figures on new buy-to-let lending show a decline in volumes for the first half of 2008.

In the six months to the end of June, 144,600 new buy-to-let loans were approved, down from 176,500 in the second half of 2007 and 169,500 in the first half of 2007.

Birmingham Midshires maintained its position as the leading gross lender in the UK market but as in the residential mortgage market, lending was curtailed by a shortage of funds.

The CML notes that the half-yearly decline was below that seen in the wider market and that loan-to-value (LTV) ratios fell slightly, with the average lender offering a maximum LTV of 83% in the first half of the year, down from 85% in 2007.

The number of outstanding buy-to-let loans rose during the six months, to an estimated 1,103,000 which have a combined value of £132.5 billion.

The increase represents a rise of 19% by volume and 25% by value, from the end June 2007.

Arrears have risen but remain below levels in the wider market, while repossession levels are roughly equal, at 0.16%.

The CML’s director general, Michael Coogan, says he expects the rental market to remain underpinned by strong demand.

However, the market may yet be flooded by properties offered for rent because their owners are reluctant or unable to sell.

According to the latest survey by the Royal Institution of Chartered Surveyors, in the three months to July, 43% more members saw a rise in potential sellers choosing to let, compared to those who saw a fall.