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Buy-to-let lending slumps as tax reforms deter landlords

Buy-to-let mortgage activity slowed dramatically in September, as the number of landlords taking out new home loans dropped by almost a fifth, owed largely to regulatory and tax changes.

Landlord investors took out just 5,200 new buy-to-let mortgages for acquiring properties in September, down 18.8% on the corresponding month in 2018, while the total value of BTL loans dropped by 22.2% to £700m, according to the latest figures from UK Finance, the industry body.

Fewer buy-to-let investors are actively looking to invest following the stamp duty and income tax crackdown, resulting on a squeeze on many landlords’ profits.


Jackie Bennett, director of mortgages at UK Finance, said: “Buy-to-let home purchases have eased again in September, suggesting lending in this market remains subdued as a result of recent tax, regulatory and legislative changes.”

Meanwhile, there were 12,300 new buy-to-let remortgages completed in September, marginally down by 0.8% on September last year.

Bennett added: “Overall remortgaging for both residential and buy-to-let properties have levelled out after a period of strong growth. This reflects the number of fixed rate loans reaching maturity.”

At the start of the year, UK Finance had predicted £12bn of buy-to-let lending for residential property acquisitions in 2018, but with tax changes eroding landlords’ returns, fewer people are investing in the buy-to-let sector, and as a result, Bennett estimates that lending will likely hit just £9bn this year.

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Poll: Are you surprised to see buy-to-let mortgage activity continue to slow?


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    Lending slumps, but not every one takes out a mortgage to buy a B T L , where else do we put our cash to get a reasonable income / return, pension schemes? not for me.

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    I own all my properties as the rental income would be unlikely to cover a mortgage anyway?
    I have to say though that I have a financial advisor and he has done very well for me with my private pension, without the hassle of renting out property, but it is always advisable not to have your 'eggs all in one basket'.

  • G romit

    PRS is shrinking by a net 4,500 properties per month. That's ~5,500 families evicted and looking for somewhere else to live in a diminishing market, with incumbent costs, disruption of kids schooling, long job commutes, loss of support group, etc.

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    In Glasgow, using the gearing of a 75% mortgage at 2% quadruples the gross yield on my own 25%. My best flat gets £2100 per month with mortgage interest of around £300. Without using mortgages my portfolio and gross yields would be only about 25% of what I currently achieve.


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