The latest Council of Mortgage Lenders (CML) data on the buy-to-let market shows a 40 per cent increase in the number of advances made in the second half of 2005, compared to the first half of that year and a 47 per cent increase in the value of the loans advanced.
More than 130,000 loans were made in the second half of the year, up from 93,400 in the first half of 2005 and 97,800 in the second half of 2004.
In value terms, new advances in the second half of 2005 amounted to £14.6bn, the highest figure ever reported by the CML for buy-to-let advances, resulting in total outstanding balances of more than £73 billion.
John Heron, managing director of buy-to-let mortgage lender Paragon Mortgages, comments: After a relatively subdued start to 2005, the second half of the year saw a significant pick-up in lending activity as confidence increased and landlords responded to sustained tenant demand by purchasing additional properties in well-targeted locations.
Data issued by the Royal Institution of Chartered Surveyors (RICS) confirms that tenant demand continued to rise firmly in the three months to January 2006, representing the largest increase in demand in four and a half years. Paragon attributes this to rising property prices squeezing potential buyers into renting.
John Heron continues: The increased tenant demand currently being reported by RICS can only be expected to continue given the latest predictions of household growth from the Office of the Deputy Prime Minister (ODPM).
“Much of the growth is expected to come from single person households, together with lone parent households and other multi-person households, all of whom we would expect to have a higher than average propensity to rent.
