The Council of Mortgage Lenders (CML) confirmed continuing decline in the U.K. for buy to let lending.
According to figures reported by the CML, in the 4Q08 there were 37,000 new loans, worth £3.9 billion 12% down on the third quarter, and 56% down compared with the 4Q07.
Market players say it is no surprise that the number of people taking out buy to let loans has shrunk, given that there are no lenders left in the market to provide loans.
"Providers of buy to let loans are either nationalized and throwing landlords off their books, or sitting on their loan books waiting for the securitization markets to open again," said Keshav Thukaram, managing director of Smartlandlord.co.uk. "Landlords, like the next generation of aspiring homeowners, cant get mortgages. And with only a negligible social sector to pick up the slack, this begs the question, where are people going to live? Unless the government puts pressure on banks to lend, the U.K. will find itself in a housing crisis."
Over 2008 as a whole, buy to let lending accounted for 10.6% of the value of total gross mortgage advances, down from 12.3% in 2007. Many buy to let borrowers will now be benefiting from significantly lower mortgage costs than when they first took out their loan. With tenant demand remaining strong in most areas, many landlords will therefore be experiencing an improvement in their net income.
At the end of 2008, however, 2.32% of buy to let mortgages were over three months in arrears (without a receiver of rent in place), while a further 0.23% were over three months in arrears with a receiver of rent in place. The comparable arrears rate for the wider market (including buy to let) was 1.88%.
In terms of repossessions, 0.11% of buy to let mortgages were taken into possession in the fourth quarter of 2008. This repossession rate is broadly in line with the wider market, although it is difficult to compare the two markets on a like-for-like basis, because appointing a "receiver of rent" (RoR) is only possible in the buy to let market, and in some ways is similar to repossession.
The CML said that the number of buy to let mortgages in arrears, in possession, or with a receiver of rent in place, is not large.