According to recent figures, mortgage lending to buy to let landlords has increased considerably since the beginning of the financial crisis. Landlord mortgages now account for just over 13% of the total mortgages in the UK. This means that lending institutions handed over more than £4 billion in the first quarter of 2013.
Funding for Lending
The rise in mortgage lending is believed to be in part thanks to the Funding for Lending (FLS) scheme. At the beginning of the recession when the sub-prime bubble burst, lenders wised up to the dangers of lending money to those who couldn’t afford to borrow and the cash pool dried up. Naturally this lender reticence didn’t help the property market and it soon became stagnant. The government introduced the FLS scheme last year to try and kick-start the market once again. The scheme was primarily designed to make it easier for first time buyers to get a foothold on the property ladder, but much of the available money has been handed out to buy to let landlords.
Buy to let is booming
Mortgage rates have fallen since last year and they are currently at an all-time low. This, in conjunction with increasing demand for rental properties in some areas, means many landlords are expanding their property portfolios. Lending to landlords has risen 1.1% since last year. The same pattern was evident in 2012 and lending to landlords rose even higher than lending to first time buyers.
Criticism of FLS
Some believe that FLA is unfairly propping up the buy to let sector and critics have questioned the validity of allowing buy to let landlords access to subsidised mortgages. But for many landlords, the current market is a win-win situation.
