By Marcus Leach

The number of new buy-to-let loans increased by 16% in the third quarter of 2011, according to data published today (Thursday) by the Council of Mortgage Lenders (CML).

Over the same period, the value of mortgages advanced in the sector grew by 19%. The data shows that the pick-up in buy-to-let lending that began in the second quarter has continued.

In the three months to September, a total of 34,500 buy-to-let loans were advanced, an increase from 29,700 in the preceding quarter. The value of lending totalled £3.8 billion, up from £3.2 billion. On both measures, buy-to-let lending was at its highest level since the final quarter of 2008.

The number and value of outstanding buy-to-let loans also continued to grow. At the end of September, there were 1,378,700 loans outstanding, worth £157 billion, up from 1,296,700 (worth £150 billion) 12 months earlier.

In the third quarter, there were 18,580 loans for the purchase of buy-to-let properties, accounting for almost 12% of all house purchase loans. But the proportion remains significantly lower than the former peak in the first quarter of 2008, when 32,650 mortgages for buy-to-let property purchase accounted for 19% of all loans for house purchase.

In the third quarter, the number of buy-to-let mortgages more than three months in arrears declined from 28,300 (1.57% of the total) to 26,300 (1.45%). There was, however, a small increase in the number of buy-to-let properties taken into possession (from 1,500 in the second quarter to 1,600) although, as a proportion of all buy-to-let properties, the figure remained unchanged, at 0.08%.

"With tenant demand remaining strong in the rental sector, some existing buy-to-let landlords have been expanding their portfolios and the growth that returned to the sector in the preceding quarter has continued," CML director general Paul Smee said.

"The recovery of buy-to-let from its low point in 2009 has helped improve supply and choice in the rental market. Despite recent improvements, however, buy-to-let lending volumes are still only around one-third of their former peaks."

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