Buy-to-let lending saw its highest monthly increase in November since stamp duty changes were introduced last April, according to the Council of Mortgage Lenders.
Landlord borrowing was up 10% for the month to £3.2 billion, although this figure was 9% down on the previous year.
Over two-thirds of buy-to-let loans were remortgages rather than house purchase.
Paul Smee, director general of the CML, said: “Buy-to-let lending, driven by remortgage activity, saw its strongest monthly lending level since the stamp duty changes on second properties introduced last April. Despite this, we expect buy-to-let lending levels in both 2016 and 2017 to prove lower than their 2015 recent peak as further tax changes take effect.”
Remortgage activity for the month dipped 5% to £5.8 billion, down 5% on October but up 14% compared to a year ago.
Mortgage lending was up 5% for the month and 2% for the year, with homeowners borrowing £11 billion for house purchase.
Monthly lending to first-time buyers rose 4% to £4.7 billion, equating to 30,100 loans.
“November lending reflected stable market conditions. Overall, 2016 did not match recent years in terms of house purchase lending growth, but lending remained resilient through regulatory and political change and aspirations for home-ownership remain strong in the UK. Our forecasts for 2017 may be less bullish than a year ago, as economic uncertainty weighs on the market, but we still predict 1.2 million transactions and a slight increase in gross lending to £248 billion,” said Smee.
Steve Olejnik, chief operating officer of Mortgages for Business, said the surge in buy-to-let lending had been driven partly by landlord confidence after investors had factored regulation changes into their planning.
“Many investors will have also wanted to beat the Prudential Regulation Authority’s changes to buy-to-let affordability checks, which came into force on 1st January, as well as the changes to income tax relief on finance costs.
“We predict that gross buy to let lending will dip by around 13% in December, due to a seasonal slowdown, which will equate to about £2.8 billion of lending for the month. This will put gross lending on track to reach the £40 billion mark for 2016 – which is in line with our initial prediction for the year. We expect that 2017’s total will be slightly lower than 2016, but not by a significant amount.
“While the regulatory changes to property investment are challenging, the property market will continue to offer strong returns to those who take an intelligent and level-headed approach to their portfolios. Landlords need to factor the forthcoming tax changes into their financial planning, and should always consult with a professional tax adviser.”
