Funding for buy-to-let mortgages has increased dramatically under the Government’s Funding for Lending Scheme (FLS), accounting for a record 13.4 per cent of all UK mortgages. That figure is up from 13 per cent in the last three months of 2012, according to the Council for Mortgage Lenders (CML).
Of the £1.2 trillion of mortgages in the UK, buy-to-let mortgages accounted for £166bn. £4.2bn was lent to landlords from January 1st to March 31st – up 13 per cent on the same quarter last year.
Buy-to-let is increasingly seen as a lucrative way to invest, largely thanks to low-cost lending backed by the Government’s FLS. It had previously been in a lull following the financial crisis, but with 17,730 properties having been bought by landlords in the last quarter (for £1.9bn), the industry is seeing a resurgence.
Some critics have questioned the way FLS is being used to support the buy-to-let industry, suggesting its success is to the detriment of first time buyers – for whom less cash is available.
However, buying to let is not without its risks, nor without its necessary costs: maintenance is seldom cheap, and getting a reasonable landlord insurance quote is not always easy. However, with yields of between 5% and 7% (as a percentage of property cost), buy-to-let is seen as an attractive and low-risk option for investors.