Buy-to-let luring £40m a day

INVESTORS ploughed more than £40m a day into the buy-to-let market in recent months, despite fears that returns are rapidly thinning.

Latest figures from the mortgage lenders show 75,100 buy-to-let mortgages were taken out in the first half of this year.

That's only 3800 more than in the preceding six months. But the average value has soared from £94,000 to £102,500 over the same period. In total, investors spent £7.7bn on buy-to-let - £1bn more than in the second half of last year.

'Although there has been a recent improvement in stock market performance, it is not surprising that many people still see property as a safer haven,' said Michael Coogan, director of the Council of Mortgage Lenders.

'As part of a balanced investment strategy, and for those looking beyond short-term speculation, buy-to-let continues to offer attractive opportunities.'

Pundits have warned that the days of high yields from buy-to-let are drawing to a close. Landlords in London, in particular, have suffered a slide in returns.

The CML said buy-to-let accounted for 6.4% of gross mortgage lending during the period, compared with 5.5% in the second half of 2002 . There are now 334,800 mortgages outstanding in the sector, worth £31.2bn or 4.3% of the mortgage market overall.

There has been a small increase (from 0.42% to 0.45%) in the number of buy-to-let mortgages more than three months in arrears, CML said. But this proportion was less than half the figure for the mortgage market as a whole.