Buy-to-let lending continues recovery but borrowing still down 15% y-o-y

The buy-to-let mortgage market's recovery continued in June with the number of loans up 12% month-on-month, according to the latest mortgage lending figures.

According to the monthly lending trends survey published by the Council of Mortgage Lenders (CML), landlords borrowed £2.9bn in June, up 12% compared with May. But the value of the loans issued to buy-to-let landlords was significantly below the volume recorded in June 2015.

The number of landlords acquiring property has dropped significantly since the 3% stamp duty surcharge was introduced at the start of April, as reflected by a 15% year-on-year decline in lending to buy-to-let investors in June, although this has a lot to do with the fact that many landlords brought forward decisions to buy property to beat the stamp duty deadline.

"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," said Paul Smee, director general of the CML. "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 are deterred by the tax changes, first-time buyers are taking advantage of less competition in the market from investors to acquire property. 

First-time buyers borrowing £5.5bn, up 28% as compared to May, and up 25% on June 2015, with more loans handed out to first-time buyers than at any other time since August 2007.

Overall, June mortgage lending was up by 29% month-on-month, and by 12% year-on-year, according to CML.

Stephen Matthews, director at London estate agent, Greene & Co., suggested that property purchase activity remains fairly robust despite wider uncertainties in the market.

He said: "The data shows first-time-buyers continue to be a driving force in house purchasing 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."