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Buy-to-let bonanza as buyer struggles continue

Buy-to-let bonanza as buyer struggles continue

Category: Mortgages

Updated: 27/07/2011
First Published: 22/07/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Buy-to-let investors are making the most of first time buyers' misfortune and snapping up houses, according to the Bank of England.

In its latest monthly report on lending, the Bank said demand for buy-to-let mortgages had been rising since the second quarter of 2010, and rose substantially in the second quarter of 2011.

Catching buy-to-let investors' eyes has been the heightened activity in the rental market, said the report.

Tenant demand has been surging of late, with some lenders suggesting the rise is a result of 'discouraged' first time buyers turning to the private rental market.

It is a theory backed up by the Association of Residential Letting Agents, whose members recently reported that the most common prospective tenants are first time buyers who cannot obtain a mortgage.

With interest from buy-to-let investors soaring, it is unsurprising that the Bank has seen signs that the availability of buy-to-let mortgages has increased over the past year.

Indeed, according to, the number of buy-to-let mortgage products had increased to more than 600 in May 2011, the highest number since September 2008.

In recent discussions, the major UK lenders also reported that new and returning entrants to the buy-to-let mortgage market had increased availability, albeit from a low base.

Some also reported that lending criteria, which had tightened sharply during the financial crisis, had started to ease.

Looking ahead, the Bank predicts the buy-to-let boom might have further to run, especially in the short term.

And with forecasts that tenant demand will continue to grow in the long term too, buy-to-let investors might be rubbing their hands together for a good few years yet.

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