Buy to let lending improves, but driven mostly by remortgaging

Gross buy to let lending increased in November to the highest monthly level since the stamp duty surcharge was introduced in April, according to data from the Council of Mortgage Lenders.

However, most BTL activity was driven with remortgage lending, with over two thirds of buy to let falling into this category rather than being for new purchases in investors. 

"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" cautions Paul Smee, director general of the CML.

Other mortgage market and buy to let analysts predict the same.

Steve Olejnik, chief operating officer of Mortgages for Business, says:  “We predict that gross buy to let lending will dip by around 13 per cent in December, due to a seasonal slowdown, which will equate to about £2.8 billion of lending for the month. This will put gross lending on track to reach the £40 billion mark for 2016 – which is in line with our initial prediction for the year. We expect that 2017’s total will be slightly lower than 2016, but not by a significant amount.”

Simon Checkley, managing director of Private Finance, says buy to let is the sector suffering most in the mortgage world currently.

“After what can only be described as an annus horribilis for the sector, lending remains subdued year-on-year. While lending has improved since stamp duty changes were introduced, significant recovery in 2017 is unlikely as tightened lending criteria and tax changes begin to bite. An unfortunate side effect will be higher rents as landlords respond to rising borrowing costs” he says.