Tax and regulation changes continue to have an adverse impact on the buy-to-let market, with the value of mortgages taken out by landlords once again falling in the second quarter of this year, when compared to the corresponding period in 2017.
Buy-to-let lending has dropped sharply since tax changes in 2016, including the introduction of a 3% stamp duty surcharge, the phasing out of mortgage interest relief, the scrapping of the 10% ‘wear and tear’ allowance, as well as tougher affordability checks on landlords looking to take out a buy-to-let mortgage.
The latest data released yesterday by the Bank of England shows that there was a decline in both fresh buy-to-let lending and remortgaging by landlords, despite the fact that the outstanding value of all residential loans continued on its upward trajectory, increasing in Q2 2018 to £1,417.2bn, which is up 3.8% year-on-year.
New loan commitments agreed to advance in the coming months during the second quarter of this year were at their highest level since Q1 2008, according to figures from the Bank of England.
But the overall proportion of remortgaging and buy-to-let loans in particular have dropped of late, the statistics show, with new lending for which buy-to-let accounted falling to just 13.1%, owed mainly to recent regulatory and tax changes in the sector.
Ross Boyd, founder of mortgage platform Dashly.com, commented: “Where homeowners tread, landlords are continuing to choose not to follow. For investors it’s more of the same, with the decline in buy-to-let lending since the first quarter firmly against the run of play.
“It’s more evidence of a slowdown precipitated by hostile tax changes in recent years that have left landlords licking their wounds.”