Lending to buy to let landlords jumps in 2013

Julian Harris
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LENDING into the UK’s buy-to-let property sector is on the rise, a group of mortgage providers said yesterday, as investors take advantage of the housing market to boost returns.

Gross mortgage lending to buy to let landlords jumped to £4.2bn in the first quarter of the year, the Council of Mortgage Lenders (CML) reported, up from £3.7bn in the same period a year earlier.

“By the end of March buy to let lending accounted for 13.4 per cent of total outstanding mortgage lending in the UK – up from 13 per cent the previous quarter and 12.9 per cent at the end of the first quarter of 2012,” the report explained.

Conditions in the market, combined with government policy, are favouring landlords at the expense of prospective first-time buyers, according to David Whittaker of the firm Mortgages for Business.

“The flow of first-time buyers is still barely a trickle, which is sending the excess demand directly into the rental sector and keeping yields high for buy to let investors,” Whittaker said.

“Landlords are understandably trying to take full advantage of the returns on offer, which is why we’ve seen an increase in the number of buy to let investors trying to refinance in the first quarter as they look to expand their portfolios.”

The funding for lending scheme (FLS) – introduced by the government and the Bank of England last year, in a bid to boost credit in the economy – is also assisting property investors, Whittaker said.

“The FLS too has helped by loosening the supply of credit to lenders, and they are passing the savings on to investors,” he added.

Separately, surveyors’ group E.surv said today that total house purchase lending was up two per cent in April, with the number of approvals rising from 53,504 to 54,364.