The Council of Mortgage lenders has released its survey of lending for the first quarter of 2012 and it shows that the buy to let market is just one third of the size it was in 2007. New buy to let loans in the first three months of 2012 totalled £3.7bn on 32,300 loans. This was 5% down on the fourth quarter of 2011 but 32% up on the first quarter of 2011.
The CML say that the buy to let sector continues to increase its share of the mortgage market with buy to let mortgages representing an estimated £12.8% of the total value of outstanding mortgages, up slightly on the figure for 2011. Landlord insurance clients with mortgages are part of a massive group of people- there are 1.4 million buy to let loans in existence with a total value of £159.4 billion.
Many people who would like to enter the market as landlords complain about the difficulty of raising finance. The CML figures suggest that the average maximum loan to value available is 75% with lenders also wanting to see rental cover of at least 125%. Based on this survey it seems that if you can present a strong business case you should be able to raise the money you need. However, you will certainly need a decent deposit.
The arrears rate in the buy to let sector is slightly lower than in the owner-occupied sector but the repossession rate is actually higher. The reason for this is that lenders make every effort to keep owner-occupiers in their homes and the whole repossession process is far more drawn out. In the case of a rented property the tenants will normally be expecting to leave at the end of the tenancy so repossession is more straightforward.