New seasonally adjusted figures released by the Council of Mortgage Lenders (CML) reveal that the level of buy-to-let borrowing slipped by 7% between August and September.
According to the firm, the 3% stamp duty surcharge continues to hit landlords hard in the pocket.
Data from the report shows the gross amount that buy-to-let landlords borrowed is also down year-on-year. There was a 22% fall in borrowing to £2.8bn with the number of loans down by 6% from August to 18,200. In addition, there was a fall of 26% in comparison to September 2015.
Paul Smee, director general of the Council of Mortgage Lenders, said: ‘Six months on since the stamp duty changes on second properties and buy-to-let continues to operate at lower levels than a year ago. But lending for buy-to-let house purchase and remortgaging has settled at its current level over the last four months.’
Steve Bolton, founder of Platinum Property Partners, feels it could take a long time to see resurgence in mortgage lending required to bring the market back to pre-stamp duty levels.
Bolton noted: ‘The fall in purchase loans suggests many landlords are holding back from expanding their portfolios. With punitive tax changes on the horizon for 2017, this trend will only become more pronounced. The unfortunate knock-on effect for tenants is rents will become more expensive as the supply of suitable rental accommodation is constricted.’
Borrowing lull in buy-to-let market
Remortgaging hit £5.5bn during September, a fall of 7% in August. However, this was 8% up in comparison to September 2015. This was a representation of 31,500 loans, down 10% month-on-month but up 2% year-on-year.
Jeremy Duncombe, director of Legal & General Mortgage Club, observed: ‘It is encouraging to see that remortgaging figures are continuing to rise on an annual basis. These figures show that borrowers are beginning to regain control of the housing market and make it work for them, as they continue to take advantage of the record low base rate.’