Rental property increases due to modest spike in buy-to-let mortgages

The number of buy-to-let mortgages taken out in 2011 increased by 84,000, according to new data.

The figures, released by the Council of Mortgage Lenders CML, indicate that the second half of the year was particularly promising, with around 35,000 mortgages taken out by customers. This is the highest the figure has been since 2008 and looks optimistic for the future.

Consequently, the number of rental properties on the housing market should increase. This is important at a time that there is a growing demand for rented accommodation.

"Buy-to-let lending continues to perform well. Demand for rented property remains high, so the rationale for buy-to-let remains strong, and there is little reason to foresee any change to this positive outlook for the sector,” says Paul Smee, director-general of CML.

In 2011 275,000 new tenants registered for private, rented accommodation, according to a survey carried out by Countrywide. This could well have been what influenced the spike in buy-to-let mortgages being taken out.

Registrations were highest in the third quarter, reaching 80,000, which was the same point in which the number of buy-to-let mortgages sharply increased by 10,000.

Properties were also being snapped off the market quicker in 2011 than 2010. Occupants were found in an average of 13.6 days, which is 1.6 days faster than the previous year.

"The benefits of the availability of good quality, private rented housing should not be overlooked, especially as there are many households which need the flexibility and mobility that the private rented sector is well placed to provide," explained Mr Smee.

While the evidence provides a positive outlook, the market is still restrained despite being on the road to recovery.

Particularly when the figures are compared to the height of the buy-to-let market in 2007 when quarterly lending peaked at over 93,000 loans, with a value exceeding £12.7 billion.

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2012-02-09 11:55:13 © Moneyextra.com