The buy-to-let mortgage market will experience a slump over the next two years, according to the latest report from the Council of Mortgage Lenders (CML).
CML Predicts Buy-to-Let Market Slump
The study states: “Buy-to-let faces a challenging period, as changes to tax treatment and the prospect of macro-prudential intervention run counter to otherwise strong fundamentals. Buy-to-let house purchase activity in 2015 may peak and fall away below 2014 levels by 2017.”
The CML claims there are three main causes of uncertainty in the sector: forthcoming changes to mortgage interest tax relief from 2017; the extra 3% Stamp Duty on buy-to-let purchases from April; and the possibility of the Bank of England (BoE) limiting landlord mortgages from next year.
It warns: “Inevitably, these will adversely impact the rate of growth in the sector and even cause lending volumes to ease back.”
It believes that buy-to-let will account for 9% of all UK property transactions this year, much lower than the 2006-08 period. It also says that buy-to-let will account for about 16% of all mortgaged purchases.
The CML report adds: “Future prospects are closely tied to potential macro-prudential regulation and incoming tax changes. We currently expect buy-to-let house purchase activity in 2016 to fall below its 2015 level, and for activity in 2017 to fall below the level seen in 2014.”
Addressing the extra Stamp Duty charges, the CML says that a consequence will be higher activity levels in the first quarter of 2016, as buyers hope to avoid the increase before it is enforced.
The report concludes: “The scale in terms of transactions is likely to be in the low thousands, though the overall impact will be close to zero over 2016, as there will probably be a corresponding fall in transactions in subsequent quarters.”1
1 https://www.cml.org.uk/news/news-and-views/market-commentary-december-2015/