The UK is seeing a ‘sustained shift’ away from buy to let, according to one analyst, following new figures released by UK Finance.
According to the figures, gross lending in the buy to let market totalled £2.9 billion in September, a month on month fall of 9%, while the number of BTL mortgages fell by 8% month on month.
Lea Karasavvas, managing director of Prolific Mortgage Finance, said; “Both homeowners and landlords took early hints from Mark Carney, so September represents the tail end of the rush to remortgage on low rates while they lasted. However, owner-occupiers and landlords are not on the same page. Homeowners have been grabbing low rates while they can while the response from landlords has been far more muted.
“This demonstrates a sustained shift as many turn their backs on the market. Landlords are waving the white flag after a severe tax bashing from the Treasury over the last two years.
“This is a statement of intent. Being a landlord is not a hobby, it’s an investment that must pay or it’s simply not worth it. The number of remortgages by homeowners has risen faster than for landlords in the last year and, more recently, is falling slower.
“Many landlords are effectively signalling that the good times are over and they don’t intend to stick around long enough to justify committing to a new deal.”
The fall in BTL lending is being attributed to recent reforms to the sector, including the Section 24 phasing out of mortgage interest tax relief and the increase in Stamp Duty, and the decision earlier this month by the Bank of England to raise interest rates.
Lucien Cook, Director of Residential Research at Savills, said; “When you get that combination of interest rate rises and the loss of tax relief, you’re much more likely to see it hit home.”
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Many landlords have found their finances coming under increasing strain recently as a series of changes to the buy to let market come into effect. The introduction of Section 24, which phases out mortgage interest tax relief, the increase in Stamp Duty on second homes, the cap on tenants’ deposits and stricter lending rules for banks have all impacted the performance of landlords’ investments.
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