UK Buy-to-Let Mortgages Now Top £200 Billion

The amount outstanding on buy-to-let loans throughout the UK now stands at £200 billion. This figure comes from the Council of Mortgage Lenders (CML), and confirms the buy-to-let boom currently gripping the country. The last five years has seen a massive rise in the amount of buy-to-let lending taking place across the country. Both purchases and re-mortgages have risen during that period of time. Back in 2009 the total figure was well below £10 billion in terms of the amount of loans granted. However by 2014 it was well over £25 billion. Still a long way to go to reach the peak seen in 2007 However despite the large spike in the figures, they are still a long way off the levels attained back in 2007. At that time over £45 billion was granted in buy-to-let mortgage products. Does the growing buy-to-let property market pose a threat? While the recession is several years behind us now, many people are still alert to the potential for problems to arise. The Bank of England has certainly commented on the power this particular market has to affect the general position of financial stability in this country. If the housing market experiences a boom and bust scenario, it can potentially be made worse by activities in the buy-to-let portion of the market. However with that said, the Bank of England is not currently recommending any interventions in the marketplace to alter the current conditions. London and the South East are top of the league for buy-to-let products Perhaps not surprisingly, London is top of the league table with regard to the number of properties bought on a buy-to-let basis. Nearly 25% of all the loans granted on a buy-to-let basis are for properties in the capital. Next on the list is the south east, which takes up 15% of the total. Terraced properties, flats and purpose-built flats and maisonettes are the most popular types of property bought for buy-to-let purposes. This data also comes courtesy of the Council of Mortgage Lenders (CML). What does the future hold? There are a couple of possibilities that could change the landscape of the buy-to-let mortgage market as it currently stands. There will be tax changes for landlords coming into force in the near future, for example. This could lead to less income for many buy-to-let investors, making it less attractive to hang onto properties that are bought for this purpose. The Mortgage Credit Directive might also have an effect, although it remains to be seen how extreme this is. While not all rental properties will be affected, a small portion will. This in turn could also affect the marketplace as a whole. As we can see, while figures are rising in this area there will be challenges in the near future that will determine whether or not the burgeoning buy-to-let market will actually take a turn for the worse. We shall be watching very closely to see whether the changes are good or bad.

Published on 4 March 2020

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