Buy-to-let lending falls by eight per cent
The value of buy-to-let (BTL) loans has fallen by eight per cent over the past five years following a change in government policy towards landlords.
Last year, the value of residential loans to individuals in the BTL sector totalled £36.9bn – a drop of eight per cent from the £40.1bn lent in 2016.
BTL loans have also seen their share of the lending market drop.
In 2021, BTL loans accounted for just 11.7 per cent of total lending in the UK. In 2016, BTL lending represented 16.1 per cent of that year’s lending volumes.
A new analysis from property lending experts Octane Capital pointed towards government policy post-2016 for the drop in BTL lending.
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However, Octane Capital also pointed out that the level of BTL loans being issued is still “substantially higher” than it was a decade ago.
“It’s undeniable that the war waged on the nation’s landlords has certainly taken its toll and in the last five years the government’s numerous dents to profitability have stifled investor appetites somewhat,” said Jonathan Samuels, chief executive of Octane Capital.
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“However, it’s fair to say the sector is still standing strong and the reduction in the total value of buy-to-let loans issued in the last five years has been marginal when compared to where we still stand today versus a decade ago.”
Octane Capital suggested that to legislative changes were to blame, citing the restrictions of tax relief on mortgage finance costs, the abolition of the ‘wear and tear allowance, a three per cent increase on the rate of stamp duty payable on buy-to-let homes and an accelerated payment schedule with regard to capital gains tax due.
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