The amount borrowed by the typical Buy to Let investor has not risen significantly, despite the current rate of house price inflation, according to the latest Buy to Let Lending Bulletin from the Association of Residential Lettings Agents.

The Bulletin, shows that the average Buy to Let loan in the six months to March this year was £80,200. This is little changed, in the face of current house price inflation, from the average Buy to Let loans taken throughout 1999. For that year loans made averaged between £67,000 and £69,400. Throughout 2000 and 2001, the average loan was £80,240, including a brief peaking at £102,000 for three months in the winter of 2000/2001.

The latest ARLA Lending Bulletin covers the six months from October 2001 to March 2002 and draws its data from the ARLA panel of Mortgage Lenders. The ARLA panel is made up of Birmingham Midshires, the specialist lending arm of the Halifax, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and Standard Life Bank.

John Crossley, Chairman of ARLA, the Association of Residential Letting Agents said: "This latest Bulletin demonstrates that the levels of borrowing and fixed rate budgeting in the Buy to Let market are both sensible and sustainable. These investors can help to provide good quality rental property throughout the country for a long time to come."

Over half of all Buy to Let borrowing was to fund investment outside London and the South East. South West England and South Wales accounted for 12.3%, the Midlands 12.2%, North West England and North Wales 14.3%, North East England 11.1% and Scotland and Northern Ireland 1.8%.

Of the 48.3% of Buy to Let mortgages for investment in London and the South East. 1.5% was for prime central London properties, 24.8% for the rest of London and 22% for the remainder of the South East.

Unsurprisingly, the average loan on prime central London property at £202,800 was four times the average for the North West and North Wales at £49,300. Borrowing against prime central London investment properties was two and a half times the average for the country as a whole.

Fixed rates are the most popular mortgage arrangement and account for 55.1% of the Buy to Let loans arranged through ARLA panel members. Discounted rates accounted for 16.1%. Other rates such as for LIBOR and Base Rate linked mortgages accounted for 22.2%. Only 6.6% were arranged at Standard Variable rates.

Most Buy to Let mortgages are on an interest only basis with no planned repayment of capital during the period of the loan. 70% of Buy to Let investors in central London (excluding prime central London) and the South East as well as in the North West and North Wales, borrowed on an interest only basis. Overall, 59.4% of all Buy to Let loans are interest only.

However, three regions stood out from all the others for making capital repayments during the period of the loan. These are Scotland and Northern Ireland where 70.8% of the borrowers arranged to repay capital during the period of the loan. 65.1% of borrowers in prime central London and 60.9% in North East England also preferred capital and interest payments.

John Crossley said: "These figures demonstrate caution and sophistication, not as some reports would suggest, casual careless investing. There are some property hotspots that effect Buy to Let investment but it must be remembered that the Private Rented Sector is a fluid, fast moving market and generally finds its own level quickly. Buy to Let investors should also remember that while capital appreciation is very high, as it is in many areas at the moment, yields will be low. As the old saying has it: You cannot have your cake and eat it."

Mr Crossley pointed out that investors who follow the advice given in the ARLA Buy to Let Charter, take proper advice about local letting market conditions, their mortgages and other financial requirements and then budget properly, should have a viable long term investment. The Lending Bulletin also showed that three quarters of all Buy to Let loans were arranged through financial intermediaries.