Buy to let mortgages up by nearly 50%

The number of mortgages being taken out by landlords increased by almost 50% last year, figures showed today.

During 2006, 330,000 buy to let loans worth a total of £38.4bn were loaned out by banks, building societies and specialist lenders.

The Council of Mortgage Lenders (CML) said the total represented a 48% increase in volume and 57% increase in value over 2005.

In total, the number of buy to let mortgages outstanding now stands at around 850,000, worth a total £94.8bn.

Since the end of 2005 – when the corresponding figures stood at 702,000 and £73.4bn – the number of buy to let mortgages has risen by 21% and their value by 29%.

By value, buy to let lending now represents 9% of all mortgage balances, up from 8% in 2005.

Arrears continued to fall during 2006, according to the CML. The proportion of buy to let mortgages three months or more in arrears dropped.

The figure is lower than the 0.89% of loans in arrears in the wider mortgage market.

The number of buy to let properties taken into possession during 2006 was 1,142 – representing 0.14% of all landlord mortgages. This compares to a 0.15% repossession rate in the market as a whole.

The number of cases where a beneficiary of rent was appointed – someone who collects rent on behalf of a lender in the case of mortgage default – was recorded at 0.06% of buy to let properties.

Michael Coogan, director general of the Council of Mortgage Lenders, said: ‘The buy to let market has performed even more strongly than the wider market over the course of 2006.

‘With evidence from other sources of strong tenant demand, rising rents and falling void periods, buy to let looks set to continue to remain popular and successful.’