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Tax and regulatory changes are negatively impacting the buy to let sector according to the new data from the Bank of England.
The value of mortgages taken out by landlords has fallen again during the second quarter of the year in comparison to the same period of 2017. Since 2016, buy to let lending has fallen dramatically. The introduction of the 3 per cent stamp duty surcharge, as well as the phasing out of mortgage interest relief and the 10 per cent wear and tear allowance has seriously impacted landlords.
The data released yesterday by the Bank of England noted a decline in both new buy to let lending as well as remortgaging by landlords. This is in spite of the fact that the outstanding value of all residential loans continued to grow, increasing in the second quarter of 2018 to £1,417.2 billion, which is up 3.8 per cent year-on-year.
New loan commitments that were agreed to advance in the coming months during Q2 this year reached a peak that had not been seen since Q1 2008, according to the figures from the Bank of England.
However, the overall proportion of remortgaging and buy to let loans in particular have fallen in recent times, according to statistics. Buy to let mortgages accounted for a mere 13.1 per cent of new lending. This change is largely down to recent regulatory and tax changes in the sector.
Founder of mortgage platform Dashly, Ross Boyd, spoke out about the results: ‘Where homeowners tread, landlords are continuing to choose not to follow. For investors it’s more of the same, with the decline in buy to let lending since the first quarter firmly against the run of play. It’s more evidence of a slowdown precipitated by hostile tax changes in recent years that have left landlords licking their wounds.’