Perhaps understandably, given the level of scrutiny the buy-to-let market faces today, the latest lending figures for the sector issued by the CML recently certainly grabbed the headlines. If the property market in general is a hot topic then the buy-to-let element is, without doubt, a major story for the chattering classes and the noticeable monthly and quarterly rises in loan numbers and value has appeared to set the cat amongst the pigeons.
Turning to the numbers themselves, gross buy-to-let lending hit £3.7bn in September, up from £3.4bn the month previously; the number of loans was also sharply up from 22,200 to 24,100, and unsurprisingly both house purchase and remortgage activity was also up. On a quarterly basis, the increase was even more pronounced with gross lending up from £8.8bn to £10.9bn, and the number of loans up from 58,000 to 71,500.
Continued activity along these lines would suggest we are likely to see buy-to-let gross lending levels for 2015 in the region of £35-40bn, and given the level of appetite to lend, the new lenders anticipated to join the sector, and the demand from buy-to-let investors, the projection for 2016 might be significantly in advance of that.
From a Fleet Mortgages perspective, given the progress we have made this year and our anticipation of a growing interest in products for limited companies and HMOs, as well as for standard buy-to-let, we are increasing our target lending levels – up from £450m to £750m.
Again, unsurprisingly, the overall news about the sector was greeted with headlines around ‘buy-to-let booms’ and the suggestion that landlords are somehow responsible for all the woes of the world, in particular, stopping first-time buyers get on the marketplace. Thankfully, there has also been plenty of common-sense commentary around the new figures pointing out the buy-to-let sector is some way off peak activity levels pre-Credit Crunch and that, in terms of risk, it is now a far less riskier sector for all concerned because of increased deposit/equity levels, borrower affordability checks, increased stress testing of loans, the list goes on.
Of course, these will not stop those with an agenda to curtail the buy-to-let market although I was somewhat bemused by a piece which somehow suggested that lenders were somehow ignoring the mood music emanating from (it said) the Treasury and FPC on the greater risks of being involved in the buy-to-let market. The fact that the FPC came out last month and said there was ‘…no immediate case for action in the buy-to-let market…’ was perhaps lost on them.
That said, there are no guarantees that buy-to-let won’t be subject to further interventionist measures, in fact, judging by recent comments from George Osborne we can expect further information on this in the forthcoming Autumn Statement. Some lenders appear to be already pre-empting this by upping their notional stress test used in their rental requirements, as BM Solutions did this month. I have no doubts that, even without formal requirements from the FPC, this is a sign of things to come.
However much the naysayers are seeking to ensure the buy-to-let market is curtailed, with responsible lenders fulfilling a real borrower need, I can only see positive times ahead for the sector. Certainly from a broker point of view, the market has pushed on apace in 2015 and no doubt the greater competition and activity levels have helped tremendously in that regard. The industry rumour-mill suggests at least half a dozen new lenders are looking to make their entrance soon, while other existing lenders may also look to dip their toe into the water. Therefore, product choice should improve and hopefully we will be talking about a strong sector, albeit with more regulatory oversight, for many years to come.
Bob Young is chief executive officer of Fleet Mortgages
