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Alliance and Leicester banks on buy to let boom

02 March 2006
Alliance and Leicester has announced plans to enter the booming buy to let sector of the mortgage market, assisted by US investment bank Lehman Brothers.

Its American partner will help the bank to decide the pricing of the mortgage range, and any risk should be reduced by A&L's role as a distributor.

A number of reports have recently attested to the strength of the buy-to-let property market, including one from the Royal Institute of Chartered Surveyors (RICS).

In fact, spokesman Jeremy Leaf went so far as to say the buy to let sector could keep the property market on track this year, making up for a predicted dearth in the first time buyer mortgage market.

The RICS survey found that 27 per cent more of its members reported a rise in tenant numbers in the three months to January than a fall, following a 23 per cent increase the previous three months.

Recent rises in house prices were one of the main causes for the demand, according to RICS, as a disappointed potential pool of buyers returned to the realms of renting.

Alliance & Leicester also told the Times it would begin offering sub-prime home loans to customers experiencing difficulty with loan repayments.

The firm's losses from bad debts rose from £46 million to £74 million in 2005.

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