CML revises buy-to-let lending forecast amid ‘lopsided’ market concerns

The Council of Mortgage Lenders (CML) has revised its forecasts for buy-to-let lending amid ongoing concerns that the mortgage market has become ‘lopsided’ in recent months.

The CML’s latest data – published towards the end of last week – has revealed that overall mortgage lending increased again month-on-month in May, soaring to £20.1bn.

This is representative of a 12 per cent rise over figures recorded in April.

However, the CML’s data echoes previous concerns that activity in the buy-to-let sector is waning due to recent changes to mortgage interest tax relief and Stamp Duty Land Tax (SDLT).

Previously, the CML predicted that total buy-to-let lending would hit £38bn by the end of this year.

But in a surprise move, the property body has slashed its 2017 forecast to £35bn – and cut its 2018 forecast to £33bn (also down from £38bn).

The move comes less than a week after the CML described the current mortgage market as ‘lopsided’.

CML director general Paul Smee, said: “Re-mortgage activity and first-time buyers continue to drive lending this year.

“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,” he said.

“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 [the Government] avoiding further changes to the tax and regulatory framework until the effect of those already in train has been properly assessed,” he added.

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Nigel is the Managing Partner and Head of Litigation and Dispute Resolution in the London office of Mackrell Turner Garrett.
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