Buy-to-let sector grows from strength to strength

The number of buy-to-let loans advanced increased in March by 10% compared to February and was up 56% on March last year, the CML figures show.

There were 16,200 loans advanced, up 56% compared to March 2013. The value of these loans totalled £2.2bn, up by 69% compared to March 2013.

The number of new buy-to-let loans in the first quarter of 2014 rose slightly on the fourth quarter of 2013 to 47,000, up 1% on the previous quarter and 46% on the first quarter of 2013. The value of these loans was £6.3bn, an increase on the fourth quarter of 2013 of 3% but up 54% compared to the first quarter of 2013.

Similarly, buy-to-let lending for house purchase increased to 8,040 loans advanced, up 8% compared to February and up 46% compared to March 2013. The loans totalled £960m in March, which was up 8% on February and up 60% in value compared to the same month last year.

Buy-to-let lending for house purchase in the first quarter of 2014 followed a similar pattern to gross buy-to-let lending, remaining unchanged compared to the fourth quarter of 2013 with 23,610 loans advanced. This was however up 38% in volume compared to the first quarter of 2013.

The value of these loans was £2.8bn, up 3% quarter-on-quarter but up more substantially year-on-year compared to the first quarter of 2013 by 51%.

Buy-to-let remortgage lending saw the most substantial upward trend increasing month-on-month to 8,000 loans, up 13% in volume compared to February and up 67% compared to March 2013.

These buy-to-let remortgages had a total value of £1.2bn, up 13% compared to the previous month and up 73% compared to March 2013.

Karen Bennett, sales and marketing director of commercial mortgages at Shawbrook Bank, said: “The continued strength of the buy-to-let sector is evidence of the ongoing economic recovery and a sign of the favourable climate that the current low interest rates have created.

“However, with calls from the OECD and others for more controls on the housing market, we may see rate rises sooner than anticipated. We have always advocated sensible borrowing and property investors need to look closely at their portfolio and carefully consider whether to take on more properties.

“They need to make sure that their portfolios will generate enough income to cover mortgages if interest rates go up suddenly.”

George Spencer, chief executive officer of lettings agency Rentify, agrees that the figures highlight the continuing strength of the buy-to-let sector: “With the number of buy-to-let mortgages advanced up 46% on the same quarter last year, it is an indication of the confidence investors have in the rental property market.

“The growing demand for rental properties and the availability of buy-to-let mortgages with easier eligibility criteria and low rates has again proven key to the success of this vital part of the UK economy.

“It remains to be seen if the political manoeuvring by the main parties will have any effect on this confidence, though neither the Coalition nor Labour have shown a clear understanding of the issues affecting the rental market.

“The government’s announcement that tenant fees charged by letting agents must be published more clearly proved to be a half-hearted attempt to gain column inches that will do nothing to address the culture of over-charging tenants by traditional letting agents.

“However, with a lack of new housing stock entering the market and many investors seeing property as a better bet than the traditional investment alternatives, the buy-to-let sector looks set to be in good health for some time to come.”