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News: Buy-to-let lending slumps as landlords deterred by tax changes

Wed, 20 Feb 19

Buy-to-let mortgage activity continued to slow in December with landlord investors taking out just 5,100 new buy-to-let home purchase mortgages, down 5.6% on the corresponding month in 2017, data from UK Finance shows.

According to the industry body, the total value of buy-to-let loans dropped by 12.5% to £700m, as fewer buy-to-let investors actively look to commit to investing in buy-to-let property following the stamp duty and income tax crackdown, resulting on a squeeze on many landlords’ profits.

In 2018, there were 66,400 new buy-to-let home purchases completed, some 11.5% less than in 2017. The £9bn of new lending in the year was 15% less than in 2017.

Simon Heawood, CEO and co-founder of Bricklane.com, said: “Landlords are feeling the effects of being in HMRC’s crosshairs as the government continues to target buy-to-let.

“It’s no surprise that many private landlords are considering abandoning the sector as the costs begin to genuinely outweigh the benefits.”

To help boost the supply of much needed homes in the private rented sector, more needs to be done to incentivise people to invest in the buy-to-let sector, according to Matt Andrews, managing director of mortgages at specialist lender Masthaven.

He commented: “From tax alterations to regulatory updates, it seems the sector is really feeling the effects of these changes. In order to keep the market attractive to BTL investors and to avoid further market uncertainty, greater incentives and lending products will be paramount.”

Meanwhile, there were 12,400 new buy-to-let remortgages completed in December, , some 25.3% more than in the same month a year earlier. By value this was £2bn of lending in the month, up 25% year-on-year.

In 2018, there were 169,100 new buy-to-let remortgages completed, some 11.2% more than in 2017. The £27bn of new lending in the year was 11.6% more than in 2017.

Paul Smith, CEO of haart estate agents, said: “Whilst it is disappointing to see further drops to buy-to-let purchasing, it is encouraging to see buy-to-let remortaging reach a record high as a number of landlords keep faith in the market.”

He added: “Now is the time to act whilst mortgage rates stay at rock bottom as landlords can lock themselves into a great deal.”

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