"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."
The CML’s buy-to-let forecast for 2017 and 2018 has been revised down from previous expectations at the end of last year, which it says reflects "tax and prudential burdens in the housing and mortgage markets".
The CML now expects buy-to-let lending of £35bn in 2017 and £33bn in 2018, a decrease from £38bn in each year, forecast in December last year.
CML director general Paul Smee said: "Remortgage activity and first-time buyers continue to drive lending this year. Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.
"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, Executive Director at Castle Trust, added: “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 slow down continue during the rest of 2017. But 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 a big and exciting opportunity. We certainly do and we stand ready to help.”
Jeff Knight, Marketing Director at Foundation Home Loans, commented: “The political picture may have had a short-term impact, but ultimately, those already in the buying or re-mortgaging process aren’t going to hold their breath for too long and the mortgage market is clearly able to withstand more than a few knocks. Record low mortgage rates have matched on-going incentives for first-time buyers, boosting confidence for those looking to get a foot in the door.
“That said, the uncertainty off the back of the election may delay a more immediate solution to the ongoing supply and demand imbalance, and appetite of those seeking mortgage approvals will be dampened with less quality property to choose from. While we wait to see what further policies will be introduced – or axed, as may be the case with Help to Buy – we need to ensure that the buy-to-let market is robust enough to best serve those saving up for that first deposit in the meantime.”
