Today’s Council of Mortgage Lenders data proves buy-to-let hasn’t got out of hand, Paragon Mortgages managing director John Heron said.
Council of Mortgage Lenders data proves buy-to-let hasn’t got out of hand, Paragon Mortgages managing director John Heron said.
The CML data showed that for every buy-to-let purchase made in 2015 first-time buyers made three.
The buy-to-let market came under government scrutiny last year, culminating in the introduction of a 3% stamp duty surcharge coming into force on 1 April.
What is more from 2017 to 2020 the amount of mortgage tax relief higher rate taxpayers will be able to claim back will be cut from 45% to 20%.
Heron said: “A common accusation levelled at buy-to-let landlords is that they have an unfair advantage over homebuyers.
“The data released today would suggest this is not the case, with buy-to-let purchases making up only 11.6% of all purchases.
“First-time buyers accounted for three times as many transactions as buy-to-let purchasers.”
He added: "The information from the CML also indicates strong credit quality in buy-to-let lending, with average loan to values moving lower, affordability strengthening and arrears at the lowest levels since before the financial crisis.
“Despite claims of over-heating, effectively the sector is still recovering from the financial crisis and if we could draw the attention of government and policy makers to any one argument this would be it.”
Last year buy-to-let lending for house purchase reached £15.6bn compared to £46.7bn for first-time buyers.
David Whittaker, managing director of Mortgages for Business, noted how remortgaging made up 59% of buy-to-let activity in 2015.
He said: “The figures reveal remortgaging is the main driver of the buy-to-let sector’s stable progress.
“Buy-to-let is charting a reliable course – that is the biggest surprise given fears of upheaval.
"December is always a sluggish month for the overall lending market, as Christmas and New Year captures the attention of most investors.
“Yet the buy-to-let market has remained stable despite the winter chill. The sector still accounts for around 18% of the overall mortgage market – a remarkably steady performance compared to previous years.”
With the 3% stamp duty surcharge coming into force from April the market is expected to have a busy few months.
Whittaker added: “This quarter we are seeing a flurry of activity which we anticipate will be balanced by a cooler month or two in April and May.
“This is only a very short-term shift. We expect the buy to let market to settle back into the steady rhythm we’ve been seeing recently, as it continues to attract mainly those investors looking for patient profit rather than a lucky buck.”
