Abbey plans products for non-professional landlords

ALAN MATHEWSON: KEEN TO SUPPORT B2L SECTOR IN 2011
ALAN MATHEWSON: KEEN TO SUPPORT B2L SECTOR IN 2011

Abbey for Intermediaries is looking at entering the buy-to-let market in 2011 with products aimed at nonprofessional landlords.

The lender currently has no buy-to-let products, but with the sector growing over the last year, it says it is a market it’s keen to support next year.

Speaking exclusively to Mortgage Strategy, Alan Mathewson, managing director at Abbey for Intermediaries, says: “We’re looking at nonprofessional landlords who may have one to three houses as they have not been able to sell their property and ended up doing buy-to-let, or landlords who have inherited a house from family.

“No decision has been made but we want to support the market.”

The Council of Mortgage Lenders’ buy-to-let data for Q3 released last week showed lending had increased by 12% from Q2, with 26,900 buy-to-let loans advanced in Q3, worth £2.8bn.

The quarterly rise of 8% by volume and 12% by value is the second consecutive quarterly rise in lending. Compared with Q3 in 2009, the volume of lending was up 14%.

Michael Coogan, directorgeneral of the CML, says: “We would expect buy-to-let demand to pick up further if rising rental trends continue and house prices remain stable.

“But there is short-term uncertainty as a result of the unresolved debate on housing benefits and landlords’ response to new limits.”

At the height of the market in 2007 there were some 346,000 buy-to-let mortgages advanced with a value of £44.6bn. When the credit crunch hit this fell to 222,700 mortgages worth £27.2bn in 2008. And last year it shrank again with 93,500 mortgages taken out worth just £8.5bn.

But some 73,800 buy-to-let mortgages worth £7.4bn were advanced in the first nine months of this year. Capital Economics says the buy-to-let recovery in the last two quarters has been ahead of the wider mortgage market.

It estimates that the share of new mortgage advances by value accounted for by the buy-to-let sector expanded from 7% at the start of the year to 7.5% by Q3.

Abbey believes that the market will continue to grow next year.

Mathewson adds: “People have been more optimistic about buy-to-let in the second half of this year and next year maybe buy-to-let will be 10% to 15% of the market – that’s something we want to look at.”