The CML said the change reflects tax and prudential burdens in the housing and mortgage markets.
The Council of Mortgage Lenders has revised down its buy-to-let lending forecasts to £35bn in 2017 and £33bn in 2018 – down from £38bn predicted in December last year.
The CML said the change reflects tax and prudential burdens in the housing and mortgage markets.
Paul Smee, CML director general, said: “Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.
“While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market.
“Following the distortion of the stamp duty change on second properties last year, we expected a slight recovery in lending levels.
“However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.
“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”
Matthew Wyles blamed tax measures such as the 3% stamp duty surcharge and the gradual reduction in mortgage tax relief on the slowing market.
He said: “We should not be surprised that hard pressed British landlords already reeling from discriminatory tax measures, hikes in stamp duty and increasingly constrained lending would halt their advance on the housing market and these figures from the CML confirm the inevitable.
“The political no-man’s land into which Theresa May’s ill-fated gamble has plunged the country is the latest reason for small time landlords to sit on their hands and no doubt we will see the slowdown continue during the rest of 2017.”
But he added: “A shake-out in the buy to let market was long overdue and our data suggest that canny investors are already starting to stockpile cash so that they are ready to exploit the opportunities which will inevitably present themselves in the coming months and years.
“Astute intermediaries will see this as a big and exciting opportunity. We certainly do and we stand ready to help.”
Alastair McKee, managing director of the UK-wide independent mortgage broker, One 77 Mortgages, said: "Buy-to-let remains on the back foot while first-time buyers are very much on the front.
"It's a black and white narrative that has been consistent throughout 2017 and is likely to continue for some time yet.
"With mortgages so cheap, competition from landlords significantly reduced and the considerable leg-up of Help-to-Buy, first time buyers are in pole position.
"Landlords, especially amateur landlords with just one or a small number of properties, have had their confidence hit extremely hard by the punitive new tax and prudential lending regime.
"The downward revision in the buy-to-let forecasts reflects the sharp deterioration in confidence among everyday landlords.”
