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BTL tax changes push ‘amateur landlords out of the market’

The steady levels of mortgage activity seen through the first half of the year continued into July, with gross mortgage lending increasing by 4% month-on-month to £23bn in July, according to an estimate by UK Finance.

On a seasonally adjusted basis, this figure is £21.9bn for the month, above the £20.5bn average seen over the last 12 months.

House purchase approvals stood at 41,587 in July, close to the six-month average of 41,567 and 9% above the total for July 2016.


At 26,133, remortgaging approvals were up on the monthly average of 25,284 over the previous six months and 3% higher year-on-year.

First-time buyers and remortgagers have primarily supported the housing market in recent months as interest rates remained at record lows, but there has been a dip in buy-to-let mortgage activity, particularly among ‘amateur’ buy-to-let landlords.

John Goodall, CEO and co-founder of buy-to-let specialist Landbay, commented: “Mortgage lending levels are rising, chiefly because mortgage rates are currently at record lows, and both first time buyers and existing homeowners are taking the opportunity to lock in a good fixed or variable rate while they still can.

“The economic and political landscape is dampening suggestions we may see a base rate rise soon, but support for normalisation of monetary policy is growing. After seven years of rock bottom rates, we could soon see a volte-face from the Bank of England; one that will be felt by mortgage borrowers right across the UK.

 “While the residential market is a hive of activity, the buy-to-let market is in a state of steady growth.

“The recent buy-to-let tax changes and new underwriting criteria have pushed some amateur landlords out of the market, but professional landlords are filling that void at the same pace.

“Indeed we may yet see a spike in buy-to-let borrowing ahead of the PRA changes for portfolio landlords in October, as investors make changes to their portfolios before the stricter lending criteria take root.” 

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