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Increase in buy-to-let loans

Buy-to-let lending has reached its highest level in four years, according to new figures from the Council of Mortgage Lenders (CML). The data shows that buy-to-let loans accounted for 11.5% of total gross mortgage lending in 2012 – up from 9.8% in 2011.

At £16.4 billion, gross buy-to-let lending was 19% higher than the £13.8 billion advanced in 2011, says the CML.

On a quarterly basis, there were 36,700 buy-to-let loans, worth £4.6 billion, advanced in the fourth quarter – up from 34,300 loans worth £4.2 billion in the third quarter, and 34,200 loans worth £3.9 billion in the fourth quarter of 2011.

By number, a total of 136,900 buy-to-let loans were advanced during 2012 (of which nearly half were for remortgage). The total number of buy-to-let mortgages outstanding at the end of 2012 stood at 1,445,300, accounting for 13% of all mortgages.

“Buy-to-let is benefiting from strong tenant demand, which is likely to continue. Loan performance compares favourably with the owner-occupier sector, and the overall outlook for the buy-to-let sector is positive,” said CML director general Paul Smee.

“Landlords who can demonstrate a strong track record are in a good position to expand their portfolios. However, new potential landlords need to tread carefully before entering the buy-to-let market; considerations such as landlord licensing reinforce the need for potential landlords to gain a strong understanding of the legal and operating environment,” he warned.