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Buy-to-let lending remains subdued

Mortgage lending may have rebounded in August with gross lending last month reaching a nine-year high of £22.5bn, but the buy-to-let sector continues to remain subdued, the latest figures show.

According to the data released by the Council of Mortgage Lenders (CML), adjusting for seasonal factors, lending has been stable over the last few months but, under the surface, the mix of lending is moving towards remortgage activity, particularly in the buy-to-let sector.

Buy-to-let activity has slowed following the introduction of the stamp duty surcharge in April and the fact that lenders are offering more stringent affordability criteria in anticipation of tax relief changes from April 2017.


CML senior economist Mohammad Jamei said: “House purchase activity for buy-to-let continues to remain subdued, even as we move away from the stamp duty change, and is firmly down compared to a year ago.

“This looks set to continue going forward, given that lenders have been tightening affordability criteria in anticipation of the forthcoming interest tax relief changes in April 2017.”

Increasing numbers of lenders are cutting buy-to-let mortgage rates in an effort to help boost fresh business from more buy-to-let landlords, but with many lenders now demanding rental coverage of 145% for buy-to-let mortgages, mainly due to the decision to restrict the amount of tax relief a landlord will be able to claim on mortgage interest to the basic rate, this strategy could have limited success.

Mike Richards, director of London-based Mortgage Concepts Associates, said: “Lenders reducing rates is not going to help at all because the government has crucified buy-to-let.

“While an interest rate is one of the concerns, it is not the only concern.

“People have a finite amount of money for deposits and most people will have to pay 3% extra stamp duty while lenders are increasing their stress rates.”

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    Thanks George


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