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Buy-to-let market set for recovery

Buy-to-let market set for recovery

Category: Mortgages

Updated: 12/11/2009
First Published: 12/11/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Hopes are high that a recovery in the buy-to-let market could be under way, after encouraging data from the Council of Mortgage Lenders (CML).

Gross lending in the market in the third quarter was 10% higher than in the previous three months, while the number of loans advanced also increased.

It is the first time either measure has reported an improvement in two years, albeit from a low base.

Within the market, both lending for house purchase and remortgaging grew, although as with the mainstream mortgage market, house purchase lending was considerably stronger.

Lower borrowing costs were said to have contributed to a continued improvement in cases of buy-to-let arrears and the number of landlords facing enforcement action.

For the third quarter in a row, there was a decline in the number of buy-to-let mortgages with arrears of more than 1.5% of the balance.

Although the number of properties taken into possession increased over the quarter, there was a sharp decline in the number of arrears cases in which a receiver of rent was appointed, often as an alternative to seeking possession of the property.

"At this stage, the recovery is modest but the figures show that buy-to-let is here to stay," said the CML's director general Michael Coogan. "Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome."

"Future demand for housing in all tenures supported by lenders will remain strong, despite mortgage funding constraints and low construction rates. With funding for social housing under pressure, the private rented sector has a strong future."

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