Buy-to-lending has increased by nearly a fifth in the last 12 months, as Brits seek to use property as an investment opportunity.
According to data from the Council of Mortgage Lenders (CML), more than more than 33,000 loans worth £3.9 billion were provided for the purchase of rental property in the second quarter, representing a five per cent rise from the previous quarter and an 18 per cent increase from the same three-month period in 2011. In 2009, only 88,500 buy-to-let loans were approved for the whole year.
Owning second and even third properties is now seen as a good use of assets, with traditional investment sectors still facing uncertainty due to wider economic problems, and savings accounts offering little in return. This extends to purchasing homes for residential letting, as well as the buying of holiday homes for rent. Should the owner be using rental income to cover the mortgage payment costs, a buy-to-let mortgage may be required.
CML director general Paul Smee said of the new data: “Buy-to-let is growing broadly in line with expectations. The rental sector has grown strongly over the last decade or so, and buy-to-let continues to help deliver a wider choice for tenants.”
It is expected that buy-to-let lending will continue to see growth throughout the year.
For those looking to purchase a holiday cottage for rent using a buy-to-let mortgage, a significant deposit will be required. The average loan-to-value ratio observed by the CML in the second quarter remained steady at 75 per cent.