The Bank of England Funding for Lending scheme will now allow Small and Medium sized enterpises (SMEs) to lend the money available on to property investors.

The Funding for lending scheme has been extended another year until January 2015 and from 2014 banks will be able to borrow £10 of cheap Bank of England money for every £1 the lend to SMEs. This has double the previous allowance of £5 for every £1 banks lend.

This doubling of incentive to try and stimulate the economy could have a very positive effect for property investors for the first time as Buy to Let is still seen as relatively low risk by banks compared to taking an educated gamble on a start up business.

Rob Wood, chief UK economist at Berenberg Bank, said ‘It could be a no-brainer. Lend to a landlord and get 10 times that lending back as essentially free funding, then recycle some of that back out again on mortgages or BuytoLet.’

£80 billion has been set aside by The Bank of England for this scheme to kick start the economy and get lending available to business, but to date the take up by banks has been disappointing with £14 billion being taken between August and December last year. However it is hoped that the extended scheme and greater incentive will boost the take up and for the Private Rental Sector add a much needed injection of competitive financing.