Boom in buy-to-let mortgages shows no signs of ending

Posted 3 March 2015

New figures have revealed that buy-to-let mortgage lending continued to grow rapidly in the last quarter of 2014 as the appetite for investment loans showed no signs of abating. Lending to landlords grew by over a quarter in the three months to December, far outstripping the growth in first-time buyer mortgages.

While the buy-to-let market continues to boom, some property experts have raised concerns about the decline in the levels of homeownership in the UK and the tax benefits offered to landlords.

Buy-to-let lending rises by 26% in last three months of 2014

The latest figures from the Council of Mortgage Lenders have revealed that buy-to-let mortgage lending rose by 26% in the last three months of 2014. Banks and building societies lent £7.7bn to landlords in the final three months of 2014, up by almost a third (32%) on the same period in 2013.

The boom in buy-to-let lending outstripped the growth in mortgages for first-time buyers. Lending to this group totalled £11.6bn between October and December, down 2% on the previous three months but up 5% over the year.

In total, there were 197,000 buy-to-let mortgages in 2014, up by almost a quarter (23%) on 2013’s figures. Mortgages to first-time buyers also rose last year, albeit at a slower rate. There were 311,500 first-time buyer home loans advanced in 2014, up by 15% on 2013.

The CML reported that total mortgage lending for house purchase rose 1.5% month-on-month in December, although it was down by 5.1% on last December’s figure.

Experts concerned about declining homeownership

The rise in buy-to-let lending has been criticised by some experts who believe that the tax breaks given to landlords are too high and that the decline in homeownership is bad for society.

The Guardian reports that figures from campaign group Generation Rent suggest landlords could be gaining as much as £26.7bn a year from the taxpayer, equal to £1,011 each for the country’s 26.4million households.

Shelter’s chief executive, Campbell Robb, said: “Another rise in house prices is yet another blow to the millions of people across the country with barely a hope of getting on the housing ladder, no matter how hard they work or save.

“When young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem. The only way to solve this problem once and for all is for politicians to finally commit to building the genuinely affordable homes we desperately need.”

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