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Buy-to-Let Lending Continues Recovery, but Borrowing is Still Down
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The buy-to-let lending market has continued its recovery, but borrowing is still down in the sector, according to the latest Council of Mortgage Lenders (CML) report.
Buy-to-Let Lending Continues Recovery, but Borrowing is Still Down
The study found that buy-to-let landlords borrowed a total of £2.9 billion in June, up by 12% on May. However, the value of these loans was significantly lower than the volume recorded in June last year.
The amount of landlords purchasing property has fallen substantially since the higher rate of Stamp Duty was introduced at the start of April, as reflected by a 15% annual decrease in lending to buy-to-let investors in June. However, the CML claims that this decline was caused by a boost in the market ahead of the Stamp Duty deadline.
The Director General of the CML, Paul Smee, says: “Buy-to-let house purchase activity remains lower than before the Stamp Duty changes at the beginning of April, but showed a large month-on-month increase. As might be expected, buy-to-let remortgage seems to have been less affected by the changes and remains consistent with lending last year.”
But while many buy-to-let landlords have been deterred by the tax changes, first time buyers are taking advantage of less competition from investors in the property market.
First time buyers borrowed a collective £5.5 billion in June, up by 28% on May and 25% on June 2015. June’s figure represents the greatest volume of loans for first time buyers since August 2007.
Overall, mortgage lending in June was up by 29% on the previous month, and 12% year-on-year.
The Director of London estate agent Greene & Co., Stephen Matthews, believes that property purchase activity has remained fairly robust, despite wider uncertainties in the market.
He explains: “The data shows first time buyers continue to be a driving force in house purchase lending, outperforming home movers for the third month running and up 25% annually. Nevertheless, the number of home movers has risen by a healthy 5% year-on-year, despite Brexit jitters and the accompanying uncertainty surrounding future economic stability.
“Buy-to-let house purchase activity still remains lower than before the changes to Stamp Duty at the beginning of April, which has had a bigger impact to annual lending than the EU referendum. However, it is clearly evident that private landlords are beginning to return to the market, as we see a large month-on-month increase.”
The findings arrive as recent data from LSL suggests that a drop in property transactions was caused by the Stamp Duty changes, rather than the Brexit vote.
