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Buy-to-let Finance: Are Landlords Beggars or Choosers?

Are finance options improving for landlords?

The Building Societies Association (BSA) has just reported that lending for 2012 was up 30% on 2011 to £30.7bn, while Bank of England figures showed mortgage approvals in December 2012 were 55,785, more than 10% up on the six-month average of 50,058.

Adrian Coles, the outgoing director general of the BSA, claimed these figures were helped by the BoE's Funding for Lending scheme (FLS), which was launched last July.

Meanwhile, data from the Land Registry showed house prices in England and Wales rose 1.7% in 2012, which takes the average property value in England and Wales to £162,080.

So, is Funding for Lending working and how might it impact property prices in the UK this year? Perhaps more importantly; is it helping landlords obtain BTL finance at better rates with higher LTVs?

The BoE put £80bn into the scheme to reduce bank funding costs, which allows banks to reduce the cost of new loans and increase lending. While it takes time for reduced funding costs to trickle down into reduced loan prices, research by The Association of Residential Letting Agents (ARLA) has revealed that the FLS is starting to have a positive effect on BTL mortgage lending.

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