Buy to let loans grow to 12pc of market in 2012

 
Ben Southwood
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THE BUY-TO-LET market enjoyed rapid expansion in 2012, ballooning back up towards its pre-recession peak, according to figures out yesterday.

Buy-to let lending exploded 19 per cent between 2011 and last year, from £13.8bn to £16.4bn, the Council of Mortgage Lenders (CML) said. This boom saw it taking up 11.5 per cent of total gross mortgage lending in 2012, up from the 9.8 per cent it took up during the previous year.

“Buy-to-let is benefiting from strong tenant demand, which is likely to continue,” claimed CML boss Paul Smee. “Landlords who can demonstrate a strong track record are in a good position to expand their portfolio.”

Smee referenced figures in the CML release showing that just 1.14 per cent of buy-to-let mortgages ended 2012 in arrears – in comparison to 2.03 per cent of owner-occupier loans. However the yearly repossession rate – though below 0.5 per cent in both cases – was nearly twice as high for buy-to-let loans.

This data came just before figures today revealed rents fell in January to reach their lowest point in six months. The average rent across England and Wales crept down 0.3 per cent in the first month of the year, reaching £732 per month, according to figures released by LSL Property Services this morning.

But the yearly increase was still firmly positive, with a 2.8 per cent gain – worth about £20 per month – over the 12 months to January.

And in London’s tight property market rents raced up 5.2 per cent – or £54 per month – over the year.

This strong longer term picture was reflected in another set of data out this morning. Markit and Knight Frank’s house price sentiment index grew to its highest point since June 2010, with residents in all 11 UK regions expecting their house to gain in value over the coming year.

The headline index climbed from 57.3 to 54.5 in January, further above the 50 level indicating no change.