North / South divide is dead in buy-to-let market

Half of all buy-to-let lending now takes place away from the South of England, latest research from ARLA reveals.

The Midlands, the North and Scotland and Wales accounted for 49.9% of all lending to buy-to-let investors in the three months to the end of September.

The average number of loans arranged each month increased by 37.8% against the previous three months to the end of June, while the average monthly value of the lending was up by 43.1%, an unusual result for the high summer months.

But for individual loans, the increase only equated to an average increase of 3.8%, a rise in the national average loan from £95,800 to £99,500.

These figures are revealed in the quarterly Survey of Lending Trends in the buy-to-let market issued by the Association of Residential Letting Agents on behalf of the ARLA panel of mortgage lenders.

Robert Jordan, ARLA president, says: “These trend figures show clearly that the North/South divide is no more so far as investment in residential property is concerned. This must be partly as a result of the exciting residential developments in cities like Birmingham, Leeds, Liverpool, Manchester and Newcastle.

“These have helped to re-establish renting as socially acceptable across all income groups. Also, there is no doubt that there is latent tenant demand for good quality property right across the country.”

The latest ARLA Trends Survey shows a sharp increase in both the numbers and amounts of buy-to-let loans executed in all regions. With a 55% increase, the North East was pipped at the post by less than half a percent for the region, with the biggest increase in the average monthly amount lent.

The South West saw the highest average monthly increase in the amount lent, with a rise of 55.4%.

The lowest increase in the amount lent was experienced in central London, outside the prime areas. With a rise of the total value of buy-to-let loans of only 31.1%, central London trailed behind Scotland and Wales, where the overall value of loans arranged increased by 35.2%.

However, unsurprisingly, Prime London and the rest of central London maintained their position for the largest individual loan amounts. New buy-to-let mortgages in Prime London averaged £310,500. The rest of central London averaged a more modest £161,500.

The smallest buy-to-let loans were still being arranged away from the South of England. The Midlands averaged loans of £79,300, the North West £68.200 and the North East £65,100. Scotland, Wales and Northern Ireland saw a marginal drop in average loan amounts of 0.1%, from £67,000 to £66,900.

The Survey of buy-to-let trends for the ARLA panel of mortgage lenders showed tracker mortgages to be the most popular interest rate type in all areas of the country. Tracker mortgages accounted for at least three quarters of all buy-to-let mortgages in the North and Scotland and Wales and for more than two thirds of all Buy to Let mortgages over the rest of the country. Standard Variable Rate Mortgages struggled at just 4% of the total.