Buy-to-let transactions increased in January due to an influx of remortgage activity rather than purchase, Council of Mortgage Lenders data has found.
Buy-to-let transactions increased in January due to an influx of remortgage activity rather than purchase, Council of Mortgage Lenders data has found.
Landlord purchase activity fell by 7.8% with buy-to-let transactions rising by 12.6%. Overall buy-to-let borrowing rose by 9% month-on-month to £3.7bn in January.
On a yearly basis buy-to-let transactions were up by 21.8% for purchase and 38.1% for remortgage.
Peter Williams, executive director of IMLA, said: "Remortgaging has risen from 55% of buy-to-let loans in January 2015 to almost 59% 12 months later, which is no surprise given the changes to tax rules announced in the interim which have prompted many landlords to reassess their finances.
“The impending stamp duty shake-up is a clear incentive for landlords to seek to complete on any new purchases before April, but the 8% monthly drop in buy-to-let purchases in January certainly does not look much like a ‘stampede’ or cause for concern.
“Either way, these policy changes mean we are in yet another period of adjustment where lending levels are being impacted by a shift from one regime to the next, making it harder to pinpoint what ‘normal’ activity now looks like.”
He added: “What’s certain is that the UK housing market needs a healthy private rental sector to remain beyond April 2016 if it is to respond to population increases and rising tenant demand.
“With the consultation on buy-to-let lending controls closing tomorrow, it seems premature in the extreme for policymakers to take further action that might ultimately weigh down too heavily on this important part of the market.”
While overall remortgage lending rose by 28% on a monthly basis lending for house purchase was down 27% on December and first-time buyer lending fell by 28%.
David Whittaker, managing director of Mortgages for Businesses, added: “Looking forward, we expect lending to calm in Q2, once the stamp duty change kicks in and the focus turns to restrictions on buy to let finance costs.
“It is this – rather than the stamp duty land tax – which will really change the way the sector operates, as the government seeks to foster a more business-like tax environment for buy-to-let.”
