After a “weak start” to the year, building societies and banks have lowered their buy-to-lent lending forecasts for 2017 and 2018.
The Council of Mortgage Lenders (CML) expects buy-to-let lending of £35 billion in 2017 and £33 billion the following year, a drop from the £38 billion for each year which was previously predicted, in December 2016.
A stamp duty increase was enforced on second home buyers, including buy-to-let investors, on April 1 2016.
CML Director General Paul Smee states: “Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.”
“While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market.”
“Following the distortion of the stamp duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.”
“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”
The CML valued that total mortgage lending peaked at £20.1 billion in May. This was a 12% growth on both the previous month and on May 2016.