UK buy to let mortgage lending rocketed in last 1/4 of 2014

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Lending for buy-to-let soared by 26% during the last three months of 2014, far outstripping the growth in lending to first-time buyers, according to figures from the Council of Mortgage Lenders.

Banks and building societies handed loans worth £7.7bn to landlords in the fourth quarter of 2014, up 32% on the same period a year earlier. Meanwhile lending to first-time buyers was £11.6bn, down 2% on the previous quarter but up 5% over the year.

The number of loans for buy-to-let across the whole of 2014 totalled 197,700, up 23% compared to 2013. Mortgages awarded to first-time buyers also increased during 2014, but at a slower pace. First-time buyers in 2014 took out 311,500 loans, up 15% on 2013, boosted by the government’s Help-to-buy scheme.

Total lending for house purchase rose 1.5% month-on-month in December, although it was down by 5.1% year-on-year.

The figures will add to the growing controversy over the decline in home ownership in the UK and the scale of tax breaks given to landlords. Figures from campaign group Generation Rent suggest landlords could be gaining as much as £26.7bn a year from the taxpayer, equal to £1,011 each for the country’s 26.4m households.

Separate data from the Office for National Statistics on the property market during 2014 also confirm the slowdown in price increases in the latter part of the year. It said house prices rose 0.7% month-on-month in December after rising just 0.2% month-on-month in November and 0.1% in October. The year-on-year increase in house prices moderated to a nine-month low of 9.8% in December from 9.9% in November and 12.1% in September (the highest rate since July 2007).

The London market is coming off the boil, with the annual rate of increase in prices in the capital falling back to an 11-month low of 13.3% in December from a peak of 20.1% in May 2014. However, annual house price inflation outside London moved up in December to 8.5%

The average UK house price in December 2014 was £272,000, up £1,000 from November 2014 but below the peak of £274,000 in August.

Shelter’s chief executive, Campbell Robb, said: “Another rise in house prices is yet another blow to the millions of people across the country with barely a hope of getting on the housing ladder, no matter how hard they work or save.

“When young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem. The only way to solve this problem once and for all is for politicians to finally commit to building the genuinely affordable homes we desperately need.”