New data from the Council of Mortgage Lenders has shown that buy to let mortgage activity in the first three months of 2010 has settled, following the upturn in the market during the hiatus on stamp duty.

After the stamp duty holiday came to an end at the start of 2010, buy to let mortgages fell 15 per cent in volume during the first quarter of this year, but according to the CML figures, it has simply settled back to former levels.

The 15 per cent decline saw 22,000 buy to let mortgages taken out, which equates to a decline in value of 12 per cent, to £2.1billion over the same period.

Stamp duty holiday aside, buy to let mortgage lending has remained broadly flat over the last five quarters, the CML has said, with the same value of lending in the first quarter of this year as in 2009, and the number of loans declining by just two per cent in that time.

Michael Coogan, CML director general, said of the figures: “Ignoring the effect of the stamp duty holiday, the lending figures show that the buy-to-let market has settled into a period of stable, low-volume activity.

“Generally, prospects for the rental market are good,” he said. “But uncertainty over house prices, interest rates and the availability of mortgage funding is continuing to hold back the buy-to-let market at this stage.”

Meanwhile, there has been a “modest improvement” in buy to let mortgage arrears, which the CML accounts to continuing low interest rates; at the end of March this year there were 19,300 buy to let mortgage customers in arrears of more than 1.5 per cent of their balance, compared to 28,800 at the same time last year.

Mr Coogan added that the CML is interested to see how the new coalition Government between the Conservatives and Liberal Democrats will handle the Treasury’s initiative to encourage investment in the private rented sector, which will not be helped if George Osborne’s proposed 50 per cent capital gains tax goes through.

“There is a case for targeted measures in the Budget, even though the primary focus will be the fiscal deficit,” Mr Coogan said.

© Fair Investment Company Ltd