Buy to let investor-landlords bought more than 100,000 new homes to rent out over last year, according to the latest lending data from the Council of Mortgage Lenders (CML).

Total new borrowing came to £10.4 billion – up by 22% from the £8.5 billion recorded in 2009 and the number of new mortgages was also up year-on-year, by 10% from 92,725.
According to the CML, buy to let borrowing on 1.3 million homes worth £152 billion now makes up 12% of the UK residential mortgage market.

The number of buy to let mortgages in arrears has also shrunk to a par with missed mortgage repayments by other homeowners. The rate of property investment properties in arrears had been running significantly above that of owner occupiers before 2009.

The main reason for the improvement is due the continuing low mortgage rates, mainly on interest only loans which had led to better profit margins for landlords. Prior to the 2008 banking crisis, many landlords had just broke even or lost on rental income but had gained from the previously strong capital appreciation trends.

However many landlords are getting good rental profits but with little or no capital growth and the CML expects this strong rental demand to continue, driven not least by the continuing deposit constraining entry into the owner-occupier market.

The CML director general Michael Coogan said: "Funding remains a key constraint
on growth in buy-to-let lending, but demand seems to be resilient and loan performance has improved. Looking ahead, loan performance could potentially be adversely affected by rising rent arrears or interest rate rises, but at present there is no indication of these pressures materialising in practice.

"There is also a strong counterbalancing growth influence on the buy-to-let market, as tenant demand seems set to remain high in the face of continuing deposit constraints to entering the owner-occupier market."