16th October 2001

Five years on since the whole concept of Buy to Let was first introduced by ARLA, the Association of Residential Letting Agents, the phrase has become a by-word and activity in residential property investment, or Buy to Let, continues to grow.

During the seven months to the end of September, the mortgage lenders on the ARLA Buy to Let panel lent a total of £1.27 billion on 14,917 properties. The total value of current loans arranged through the ARLA panel is £4 billion which has been lent against 53,000 investment properties. 

The lenders include the original launch lenders, Birmingham Midshires (then known as Halifax Mortgage Services), Mortgage Express and Paragon Mortgages. Joining these three innovating lenders on the panel are the Clydesdale Bank and NatWest Mortgage Services.

The average amount lent by the panel each month has grown from £16.3 million at the start of 1997 to £181.4 million a month since March this year. The average loan is now £81,300 up from the lowest average of £67,000 in early 1999.

Announcing the figures, John Crossley, FRICS, Chairman of ARLA, said, "The fifth birthday of Buy to Let shows a remarkably steady pattern of substantial growth in terms of the number and the values of individual loans. Such stability in a wholly new investment sector suggests that well informed property investment decisions are being made."

The average loan on prime London Buy to Let properties is £170,000, five times the average of £32,000 seen in Scotland, Wales and Northern Ireland and more than three times the average of £51,800 in England north of the Wash.

Unsurprisingly, the most Buy to Let investment by value is to be found in London. 32.2% of the value of the total Buy to Let lending is to within the M25 although it only funds 20.3% of all Buy to Let properties.

Excluding London, over a quarter of all Buy to Let properties are to be found in South East England, representing 26.1% of the total value lent through the ARLA panel. 14.7% of the properties and 11.1% of the value is in the North East. 13.6% of the properties and 9.9% of the value is in the Midlands, North West England and North Wales have 13.3% of the properties and 10.1% of the value. South West England and South Wales accounts for 11.7% of the properties and 10.2% of the value. Scotland and Northern Ireland each have 0.8% of the properties and 0.4% of the value.

Commented John Crossley, "ARLA Buy to Let has brought more choice to both the Housing Market and the Personal Finance Sector in all areas of the country. Mature investors buying good quality properties and presenting them to let with a high standard of decoration, furnishing, fixtures and fittings have transformed the image of the Private Rented Sector. These investors have made renting socially acceptable and part of normal housing choice."

"At the same time, the innovations of the ARLA panel of mortgage lenders have brought fresh investment opportunities to a low inflation economy where the traditional haven for savings, the deposit account, can no longer provide viable returns," Mr Crossley added. 

The Association forecasts steady growth in demand throughout the Private Rented Sector for the foreseeable future. Tenant demand will continue due to older first time buyers, the requirements of job mobility and flexibility, the preference for living alone and other social factors such as the high divorce rate.

Details of the ARLA panel of lenders and the location of ARLA member letting agent are available on 0845 345 5752 or visit www.buytolet.co.uk

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