As a result, the number of buy-to-let loans declined by 15% to 22,000 in the first three months of 2010. Over the same period, the value of lending also declined, by 12% to £2.1 billion.
Leaving aside the impact of the stamp duty holiday, however, buy-to-let lending has now remained broadly flat over each of the last five quarters. Compared to the first quarter of 2009, the value of buy-to-let lending in the first three months of this year is unchanged, while the number of loans declined by just 2%.
Low interest rates are continuing to contribute to a modest improvement in buy-to-let arrears. At the end of March, the number of loans with arrears of more than 1.5% of the mortgage balance totalled 19,300 (1.56% of all buy-to-loans), compared with 20,700 (1.69% of loans) at the end of 2009, and 28,800 (2.47% of loans) a year ago.
The number of buy-to-let properties taken into possession in the first quarter of 2010 totalled 1,400, an increase from 1,200 taken into possession in the preceding three months but unchanged from the total a year ago.
Meanwhile, cases where a receiver of rent had been appointed totalled 11,200 at the end of March, down from 11,900 three months earlier but up from 9,200 a year ago. These cases are similar in many ways to a lender taking possession of a mortgaged property, with the landlord being removed and the receiver collecting rent and passing it on to the lender to apply to mortgage payments.
Commenting on the figures, the CML's director general Michael Coogan said:
"Ignoring the effect of the stamp duty holiday, the lending figures show that the buy-to-let market has settled into a period of stable, low-volume activity. Generally, prospects for the rental market are good. But uncertainty over house prices, interest rates and the availability of mortgage funding is continuing to hold back the buy-to-let market at this stage.
"We also want to see how the new coalition government takes forward the Treasury's initiative to encourage higher investment in the private rented sector, bearing in mind the scope for growth that exists to meet future demand from tenants. There is a case for targeted measures in the Budget, even though the primary focus will be the fiscal deficit."
Nick Hopkinson, Director of Property Portfolio Rescue (PPR), comments:
It is obviously good news for those at risk that the number of repossessions has dropped slightly in the last quarter according to the latest data. However, the number of struggling households in serious debt with substantial mortgage arrears remains historically high despite the lowest interest rates ever remaining in place for over a year now.
Unemployment is still growing, average incomes remain under pressure and anyone managing a household budget will tell you that their real cost of living and personal inflation is creeping up ominously already this year. Combined with the tax rises and public spending cuts that will follow the emergency budget next month, many of those in deep arrears may well be tipped over the edge into repossession.
Any increase in interest rates to ward off further inflation will only make the situation much worse for many thousands of other mortgage payers who are currently hanging on to their homes in these unstable economic times. I therefore fear we will see repossessions increase again soon.
