New buy to let lending increased for the second consecutive quarter in the last three months of 2009, according to figures released from the Council of Mortgage Lenders (CML).

There were 25,800 new loans advanced in quarter four, up from 23,700 in the third quarter but down from 38,000 in the fourth quarter of 2008. The 2009 growth is from a very low base after a consistent decline through seven consecutive quarters.

Gross advances totalled £2.4 billion in the fourth quarter of last year, up £300 million from the third quarter but down £1.6 billion from the fourth quarter of 2008.

Volumes remain comparatively low, both in absolute terms and as a percentage of overall lending.

For 2009 as a whole, there were 93,500 buy to- let loans advanced. This is 58 percent down on the number advanced in 2008 (222,700) and is the lowest annual volume since 2001.

All types of buy to let lending increased in the last three months of 2009. As with the mainstream mortgage market though, loans for house purchase continued to be advanced at about twice the rate of loans for remortgage with 62 percent of new buy to let loans being for house purchase.

For 2009 as a whole, 60 percent of buy to let lending was for house purchase, compared to just 46 percent in 2008, demonstrating an ongoing demand to increase residential investment portfolios if finance is available
The number of landlords with arrears of more than 1.5 percent of the balance stayed the same in the fourth quarter at 20,700, but is 37 percent down from the 32,900 seen in the same period the year before.

The number of buy-to-let properties taken into possession in the fourth quarter fell by 25 percent from quarter three but rose 9 percent from quarter four 2008.

Commenting on this latest buy to let data, the CML’s director general Michael Coogan said: “We are concerned that future, wrongly directed, regulation may actually prevent buy to let playing its vital role in providing good quality homes and wider housing choices for people who cannot afford home ownership or do not qualify for social housing.”

David Brown, Commercial Director of LSL Property Services, said: “The buy-to-let mortgage market is returning. But it will be a marathon, not a sprint. The number of new loans in 2009 is still only a quarter the levels we saw in 2007.

Commenting on the repossession figures, Simon Rubinsohn RICS chief economist said: “Data from both the Ministry of Justice and the Council of Mortgage Lenders provides further evidence that the fall out from the downturn in the housing market in terms of repossessions is proving relatively modest compared with the experience of the early 1990's.

“Looking forward, we suspect that the number of repossessions in 2010 will be broadly in line with that seen over the past 12 months (46,000).”.