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Buy-to-let market reaches five year high

Recent figures from the Council of Mortgage Lenders (CML) have revealed a 21 per cent increase in lending to landlords compared with the previous quarter.

Last quarter, around £5.1bn was loaned to landlords, with the value of loans extended rising by 31 per cent when compared with the same period in 2012.

Although loans to landlords are beginning to increase year on year, the amount loaned to landlords still remains lower than it was at the peak of the housing market, prior to the financial crisis. In the third quarter of 2007, lending to landlords stood at £12.7bn.

George Spencer, chief executive officer at online lettings company, Rentify, told the Telegraph: “We expect the market to continue to grow at an impressive rate in coming months. We are adding rental properties to our website at the rate of 600 a week and now have 140,000 landlords and tenants registered with us as both sides look for alternatives to traditional high-street letting agents.

“This growth is fuelled by a renewed appetite from investors, both experienced and novice alike, along with better availability of buy-to-let mortgages at lower rates and with looser criteria than at any time in the past five years.”

The results come amid promises from the Bank of England that interest rates will remain low until unemployment in the UK reaches seven per cent. In light of this pledge, mortgage rates affecting landlords are expected to continue to drop, and housing experts have raised concerns that the UK could be heading towards another housing bubble. Experts argue that the new Government schemes such as Help to Buy and NewBuy, which promise cheaper mortgages for homebuyers but do not guarantee a new supply of housing, could create inconsistency between supply and demand.

However, global head of foreign exchange strategy at HSBC, David Bloom, has dismissed these fears. He said: “The big difference this time around is that most recessions in the UK have inflation and when they have inflation the central banks are forced to raise interest rates and people lose their jobs. What is happening in this downturn is that unemployment remains low and the payment and debt is very cheap and that is what saved the UK economy.”

Julie Palmer

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Julie Palmer

Regional Managing Partner

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Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.

Julie is a member of the Insolvency Practitioners Association and the None Administrative Receivers Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.

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