Record tenant demand drives landlord purchases

"There has also been a 39% increase in the volume of loans created in Q3 2011 compared to Q3 2010, with the volume of loans now sitting at more than 34,000. Tenant demand only looks set to increase even more in the coming months so we need to sustain a consistent level of growth across the market.

"It is also interesting to note the sharp rise in house purchase numbers from the second quarter. This shows that landlords are reacting to high levels of tenant demand.

"Remortgaging activity is also interesting. You would not expect such high levels of remortgaging activity given the benign and low interest rate environment – there is little incentive for landlords to move from their lenders’ SVRs – which suggests that landlords are releasing equity in their existing properties to fund new house purchases.

"In addition, our experience is that landlords are using their own cash and short-term borrowing to purchase and renovate property and then remortgaging using buy-to-let finance. I expect this will be a theme of the buy-to-let market for quarters to come.

"Finally, the figures also show that the gap between the level of arrears for owner-occupied and buy-to-let is widening. In Q3 the level of arrears in the owner-occupied market sits at 2.14% and buy-to-let at 1.91%, reiterating buy-to-let’s strong credit quality."

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