Buy-to-let mortgages continue to gain popularity among landlords across the UK, as ongoing demand from prospective tenants drives industry demand, one industry expert has claimed.
According to Bernard Clarke, communications manager at the Council of Mortgage Lenders (CML), household growth is still outstripping provision of property, which highlights an excess of demand over current supply.
Mr Clarke noted it is becoming increasingly difficult for individuals to become permanent occupiers and purchase their own home, meaning prospects for the rental sector appear to be "strong for the foreseeable future".
He added it is "not surprising" that data from the CML has highlighted a rise in buy-to-let lending, as more landlords view current market conditions as an opportunity to make additions to their property portfolios.
"The rental sector is clearly expanding, which implies there is an increased choice for tenants. I think it is making a positive contribution to the private rented sector, helping to provide a wider choice for tenants and over a period of time it has contributed to improved standards in the private rented sector," Mr Clarke explained.
An increase in the availability of funding for mortgage lending would also provide enhanced conditions for the sector, the expert argued.
He said the Funding For Lending initiative is likely to help deliver that over time, but this government scheme is still in its infancy.
As part of the scheme, banks will be given strong incentives to boost lending by lowering interest rates and increasing the availability of business loans and mortgages and they will be rewarded by the Bank of England for the more money they loan.
Mr Clarke said financiers need to make their own decisions about the credit-worthiness of those companies who are looking to borrow money, but the pricing of the initiative should change to improve the availability of money to the sector.
Published on: August 15, 2012