Signs of life in the buy-to-let market

There are signs of a modest reco-very in the buy-to-let sector despite last year being the worst for buy-to-let lending since 2001.

Figures from the Council of Mortgage Lenders show that the number of buy-to-let mortgages ad-vanced in 2009 fell to its lowest level for eight years.

There were 93,500 buy-to-let loans last year, down 58% on the 222,700 advanced in 2008. Gross buy-to-let lending was just £8.5bn last year, down from £27.2bn in 2008.

But the figures for the last three months of the year point to an improving picture for the sector, albeit from a low base.

New buy-to-let lending rose for the second quarter in a row, going from 25,800 new loans in Q3 2009 to 25,800 in Q4.

Between October and December gross advances totalled £;2.4bn, a rise of 3300m compared with the previous three months but down £1.6bn on the same period in 2008.

Buy-to-let arrears went from 32,900 in Q4 2008 to 20,700 in Q4 last year. Overall in 2009 there were 5,700 buy-to-let repossessions, equating to 0.46% of the total buy-to-let book.

Michael Coogan, director-general of the CML, says: “I am encouraged by this sign of recovery although new business remains well below previous levels.”

But Geoff Laird, principal of Buy to Let Funding Services, says the lack of housing stock and continuing rise in prices mean the next six months should present a great opportunity for investors. He believes that buy-to-let is still viable in the long term.