Buy-to-Let Lending Up by Almost 40% Over the Past Year

Buy-to-let lending has risen by almost 40% over the past year, defying new Government measures to curb investment in the private rental sector.

Buy-to-Let Lending Up by Almost 40% Over the Past Year

According to the latest figures from the National Association of Commercial Finance Brokers (NACFB), buy-to-let has had a very strong year, despite the various tax changes that have been announced over the past 18 months.

The organisation found that landlord borrowing has not been materially affected by April’s Stamp Duty hike, when the 3% surcharge for buy-to-let investors and second homebuyers was introduced.

Almost £5 billion worth of business was written by NACFB for buy-to-let landlords in the year from July to June, marking a 39.1% increase on the previous 12 months.

Alongside the Stamp Duty surcharge, landlords have been faced with the 10% Wear and Tear Allowance cut and forthcoming restrictions to mortgage interest tax relief.

The body also reports that small business lending has hit an all-time high over the past 12 months, despite a backdrop of political and economic uncertainty surrounding the EU referendum. Lending has risen by almost 30% to reach £20.7 billion.

However, while traditional forms of lending – such as commercial mortgages – have had an impressive 12 months, lending in the alternative finance space, which includes peer-to-peer and crowdfunding, has slowed. Business written by NACFB brokers over the last year has dropped by 14.4%, down from £848m to £725m.

Despite this, other areas have also experienced strong growth, including invoice finance (22.8%), leasing and equipment finance (10.5%), development finance (49.8%) and bridging finance (74.6%).

The organisation’s Adam Tyler comments: “It’s been a phenomenal and record breaking year across the commercial finance sector. With the UK’s SME community showing a real appetite for growth, despite the uncertainty of Brexit, we have seen small business lending at levels above even those registered before the financial crash.

“Interestingly, the figures show that there has been a significant switch by small businesses back to traditional forms of lending. The alternative finance sector has grown at such a pace that it was inevitable that rate of growth couldn’t be sustained. Peer-to-peer will always have its place, but alternative forms of funding are no longer the only future; they are just one of many forms of finance available to small and medium-sized businesses.

“There has never been a better time for businesses to secure finance, as the commercial finance sector continues to innovate and diversify. The challenge is to make sure the message reaches SMEs that there are many routes to funding.”

Landlords, have you continued to invest in buy-to-let this year, despite the tax changes you face?