The number of buy-to-let loans secured by buy-to-let landlords increased in January to the second highest monthly level since the introduction of the 3% stamp duty surcharge on second homes in April 2016, behind November 2016, new figures show.
But rather than new loans to invest in new much needed private rented housing, this activity was actually driven by buy-to-let remortgage lending which accounted for more than two thirds of total lending.
The volume of loans for buy-to-let house purchase advanced in January was at an eight month low in part due to the traditional seasonal dip in activity in the winter months.
By contrast, buy-to-let remortgage lending was at its highest monthly level, alongside November last year, since the stamp duty reform was introduced.
With mortgage tax relief set to be phased out from next month and now that the Bank of England’s Financial Policy Committee has been granted greater powers over the buy-to-let market, making it harder for many buy-to-let landlords to get a mortgage due to new tougher mortgage affordability tests, activity levels in the sector could yet slow further.
Paul Smee, director general of the CML, commented: “Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels. This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April.”