North South Divide is Dead in Buy to Let Market

Association of Residential Letting Agents

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North/South Divide is Dead in Buy to Let Market

17th November 2003

Download ARLA Members Survey of the Buy To Let Sector - 4th Quarter 2003 71K
Half of all Buy to Let lending now takes place away from the South of England. The Midlands, the North and Scotland and Wales accounted for 49.9% of all lending to Buy to Let investors in the three months to the end of September.
The average number of loans arranged each month increased by 37.8% against the previous three months to the end of June, while the average monthly value of the lending was up by 43.1%, an unusual result for the high summer months.

However, for individual loans, the increase only equated to an average increase of 3.8%, a rise in the national average loan from £95,800 to £99,500.

These figures are revealed in the quarterly Survey of Lending Trends in the Buy to Let market issued by the Association of Residential Letting Agents on behalf of the ARLA panel of mortgage lenders. These are Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages, and The Mortgage Business.

Said ARLA President, Robert Jordan FRICS, “These trend figures show clearly that the North/South divide is no more so far as investment in residential property is concerned. This must be partly as a result of the exciting residential developments in cities like Birmingham, Leeds, Liverpool, Manchester and Newcastle. These have helped to re-establish renting as socially acceptable across all income groups. Also, there is no doubt that there is latent tenant demand for good quality property right across the country.”

The latest ARLA Trends Survey shows a sharp increase in both the numbers and amounts of Buy to Let loans executed in all regions. With a 55% increase, the North East was pipped at the post by less than half a percent for the region, with the biggest increase in the average monthly amount lent. The South West saw the highest average monthly increase in the amount lent, with a rise of 55.4%. The lowest increase in the amount lent was experienced in central London, outside the prime areas. With a rise of the total value of Buy to Let loans of only 31.1%, central London trailed behind Scotland and Wales, where the overall value of loans arranged increased by 35.2%.

However, unsurprisingly, Prime London and the rest of central London maintained their position for the largest individual loan amounts. New Buy to Let mortgages in Prime London averaged £310,500. The rest of central London averaged a more modest £161,500.

The smallest Buy to Let loans were still being arranged away from the South of England. The Midlands averaged loans of £79,300, the North West £68.200 and the North East £65,100. Scotland, Wales and Northern Ireland saw a marginal drop in average loan amounts of 0.1%, from £67,000 to £66,900.

The Survey of Buy to Let Trends for the ARLA Panel of Mortgage Lenders showed Tracker mortgages to be the most popular interest rate type in all areas of the country. Tracker mortgages accounted for at least three quarters of all Buy to Let mortgages in the North and Scotland and Wales and for more than two thirds of all Buy to Let mortgages over the rest of the country. Standard Variable Rate Mortgages struggled at just 4% of the total.

The full survey of Buy to Let Trends is available on www.arla.co.uk together with links to the ARLA Panel of Mortgage Lenders, how to find ARLA member letting agents and the Association’s role in the Private Rented Sector.

Download ARLA Members Survey of the Buy To Let Sector - 4th Quarter 2003 71K