THE number of buy-to-let loans, and the amount of lending, are now their highest since the financial crash in the third quarter of 2008, raising fears that a new crash is being prepared.
Private landlords are taking advantage of the government’s Help to Buy scheme and the lack of council housing in a big way, new figures on buy-to-let mortgages show.
Tough economic conditions, including wage freezes and unemployment, mean first-time buyers still find it hard or impossible to get on the housing ladder.
But banks and building societies advanced 40,000 mortgages, worth £5.1bn, to buy-to-let investors in the second quarter of 2013, according to data published yesterday by the Council of Mortgage Lenders (CML).
Taxpayers already pay rent to private landlords who own more than 1.5m dwellings, and this latest growth will likely add another 16,000 new claimants, say the GMB.
The trade union published a study which shows that tenants in 40.4% of the 3.9m private rented homes in England and Wales are in receipt of housing benefit.
The figure ranges from 51.5% in the North East to 34.4% in London.
GMB general secretary Paul Kenny said: ‘Housing benefits to meet housing costs for rented accommodation on low incomes is a Thatcher Tory policy. The cost has ballooned to £23bn per year.
‘Over the past 30 years a huge slice of the £411bn of taxpayer’s funds spent on this Tory policy has been funnelled to private landlords as “corporate” welfare.
‘Public funds should be switched to investment in social housing and away from this failed expensive Tory policy of corporate welfare and private greed.
‘Half the cash spent in Britain on housing benefit last year would fund over 80,000 new homes each year across the country’.
The CML said: ‘Buy-to-let lending is continuing to recover strongly, but from a low base.
‘The number of loans advanced in the second quarter was 19% higher by volume and 21% higher by value than in the preceding three months (when lenders advanced 33,500 mortgages, worth £4.2 billion).
‘Year-on-year, buy-to-let lending was 19% higher by volume and 31% higher by value (33,600 loans in the second quarter of 2012, worth £3.9 billion).
‘Lending for house purchase accounted for around half the buy-to-let loans advanced, and increased by 15% by volume and 19% by value over the preceding quarter.
‘But the growth in remortgaging was stronger, with an increase over the same period of 24% by volume and 29% by value.’
David Whittaker, managing director of Mortgages for Business, said: ‘Demand for rental property remains red-hot.
‘Landlords are refinancing in their droves to raise enough capital to make further additions to their portfolios.’
