The latest data released by the Council of Mortgage Lenders shows that overall buy-to-let lending rose in November to hit the greatest monthly levels since the stamp duty charges came into force during April. More investors are seemingly taking out landlord insurance on a property.
This activity was driven primarily by remortgage lending, with over two-thirds of buy-to-let loans being remortgages as opposed to house purchase. In fact, remortgage activity actually dropped by 5% month-on-month, but was 14% greater than one year ago.
Paul Smee, director general of the Council of Mortgage Lenders, observed: ‘November lending reflected stable market conditions. Overall, 2016 did not match recent years in terms of house purchase lending growth, but lending remained resilient through regulatory and political change and aspirations for home-ownership remain strong in the UK. Our forecasts for 2017 may be less bullish than a year ago, as economic uncertainty weighs on the market, but we still predict 1.2m transactions and a slight increase in gross lending to £248bn.’
‘Buy-to-let lending, driven by remortgage activity, saw its strongest monthly lending level since the stamp duty changes on second properties introduced last April. Despite this, we expect buy-to-let lending levels in both 2016 and 2017 to prove lower than their 2015 recent peak as further tax changes take effect,’ Smee added.
John Phillips, group operations director at Just Mortgages and Spicerhaart, feels: ‘It is important to remember that we’re going through an adjustment period and although property transactions may dip slightly due to economic uncertainties, regulatory changes and tax burdens, the market remains resilient thanks to low interest rates and deals from lenders.’
‘However, in terms of buy-to-let, more changes face landlords in the form of tougher affordability checks and the start of the withdrawal of tax relief on mortgage interest. The slower growth in landlord’s portfolios comes as no surprise given the new minimum expectations for underwriting standards in buy-to-let mortgages. Although the mentality of property investment is still quite embedded, the current weakness in the supply of new homes will continue to affect the market and it will be interesting to see what comes out of the government’s housing white paper later this month,’ Phillips continued.
‘Due to the weaker outlook for buy-to-let house purchases, first-time buyers could make up a large portion of net lending going forwards. There still appears to be an appetite to buy or remortgage with aspirations for homeownership remaining strong, and I am confident this will help the market to build momentum throughout 2017,’ Phillips concluded.