The buy-to-let market turbo-charged its way through 2012, with lending up to 11.5% of the total gross mortgage lending at £16.4bn (for a total of 136,900 buy-to-let loans). That’s 19% higher than it was in 2011, and its highest level for four years, according to figures from the Council of Mortgage Lenders (CML).
There were 36,700 buy-to-let loans worth £4.6bn, advanced in the fourth quarter – up from 34,300 loans in Q3 2012.
Buy-to-let loans had a lower rate of arrears, at 1.14%, than owner-occupier loans, at 2.03%, in 2012. But the annual repossession rate of buy-to-let was higher, at 0.48%, than the equivalent owner-occupier rate of 0.27%. Buy-to-let loans lenders typically needed a 25% deposit in 2012, with an average minimum rental cover requirement of 125%.
CML director general Paul Smee says: “Buy-to-let is benefiting from strong tenant demand, which is likely to continue. Loan performance compares favourably with the owner-occupier sector, and the overall outlook for the buy-to-let sector is positive.
“Landlords who can demonstrate a strong track record are in a good position to expand their portfolios.”