At the end of March this year, buy-to-let lending increased to 13.4% of total outstanding mortgages, up from 13% in the last quarter of 2012 and from 12.9% a year earlier, according to the Council of Mortgage Lenders.
The sector is increasingly being seen as a good bet for lenders. Of all mortgages in arrears of over three months, only 8.3% were buy-to-let and that figure is going down steadily.
It looks like the private rented sector may well become more attractive, even for longer term tenures in Britain in the years to come. In a volatile jobs market, infused with higher levels of part time working and arguably lower expectations of job security, some people may feel it too risky to buy at present. They may also have difficulty obtaining a mortgage because of those factors.
It means that tenant demand is high and this is driving more landlords, previously wary since 2008, to buy-to-let. The phenomenon is providing a further boost for the housing market by further encouraging developers to build homes.
Although first time buyers are coming back to the market, there are still very many people who remain wary of buying a home and whose money moves instead into the buy-to-let field, ensuring good yields for landlords.
This added interest in buy-to-let naturally means the landlords are experiencing more competition and fees are dropping. In addition, the Governments Funding for Lending scheme, which has helped to open up the market for first time buyers, is now being seen to create opportunity in a roundabout way for those who want to rent. Easier credit is made available to lenders and savings are being passed on to landlords.
And the Funding for Lending Scheme is having an added affect. Fewer people are being forced to rent when they would prefer to buy; those who are left, feel renting suits them better. They are happier in their choice and they talk up the sector.
The ripples of the Funding for Lending scheme are indeed being felt now in many parts of the housing market. Landlords who are watching the resurgence of their sector are now looking to improve and increase their portfolios, which in turn drives the market for developers to build new homes.
As the housing market recovers, it gains strength from all its constituent rejuvenating parts.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.