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Buy-to-let lending continues to fall as landlords back out of market

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.”

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Poll: Do you expect to see the decline in buy-to-let lending continue for the foreseeable future?


  •  G romit

    this is precisely what George Osborne wanted.

    Unfortunately, the collateral damage is Tenants facing escalating rents, and soaring homelesness


    I disagree to some extent G. Osborne was after tax and as the receipts are showing SDLT take has declined. However as landlords are selling up then the Treasury is at least benefiting from CGT, for now.

    Tenants are indeed facing rent rises and homelessness but the Councils are also taking it on the chin with mammoth rises in emergency accommodation costs. This article shows council by council how much costs have increased by... https://www.insidehousing.co.uk/insight/the-cost-of-homelessness-council-spend-on-temporary-accommodation-revealed-57720

  • James B

    Yes landlords maybe ‘licking wounds’ but tenants pay the ultimate price with higher rents and reduced supply. So government is helping no one really in this sector !

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    In Glasgow, where the SNP "government" has added additional problems in removing all certainty in lease duration with its crazy new PRS legislation, rents for decent flats have gone up by 25% over the last 18 months. Heartfelt thanks to the SNP! Glad I'm a landlord and not a tenant!

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    maybe it's all the buy to let MPs looking to push rents up, in the long run that's what the government is achieving

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    What happened to the 3% being scrapped for landlords with over 10 properties? The government said they were trying to drive the rental sector out of the hands of inexperienced landlords and into experienced landlords. To avoid the income tax restrictions you can buy in a Ltd company, but you are penalised on the mortgage BTL rates. Lenders need to align Ltd company rates and personal BTL rates by adding a PG to Ltd company borrowing, and the 3% needs to be scrapped for investment property or for landlords with over 10

    James B

    The rates gap has narrowed dramatically.. we’ve just done both routes recently and only 0.5/0.7% difference
    Taking account tax it’s a no brainier to pay the higher inside a company


    I agree they have closed, but they need to be aligned to really get some traction. I do not see what the difference is to the lender if there is a PG. Also, there are not as many lenders who want to do multiple units. We have 5 houses all on the same title in a Ltd company and yet there are very few who will do it, and those who will penalise you with a higher rate. If they were on separate titles it would be no problem and a lot cheaper but that will cost a fortune in CGT and SDT. Catch 22!

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    Duncan, most ltd co BTL already insist on a PG, but - naturally - don’t choose to offer lower interest rates alongside that!

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    Over and above George Osborne's 3% we have an extra 3% tax here in Wales rising to 6% on properties over £180,000 which is imposed by the Welsh Assembly Government as a land tax.
    So, as I understand it, a property over £180,000 bought to let out, would incur a duty of 9%.

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    I am just selling some property in Wales, and I think you will find that you pay 0% up to £180k + 3% if second property and over £40k. There is a sliding scale much like the UK for amounts £250-500k 3.5%, £500k-£1m 5%, etc. Most BTLs in Wales should be captured under £180k I would have thought so all you will pay is the 3% extra. Not sure about the sliding scale up to 6% extra that you refer to but it’s still wrong and will stifle the already struggling Welsh property market.


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