Gross buy-to-let increased 11% by value and 12% by volume in January, compared with December.
The number of loans advanced for buy-to-let was the second highest monthly total since the changes to stamp duty on second properties in April 2016, behind November 2016. However, gross lending by value and volume was 16% down on January 2016.
In total there were 20,000 advances, with a value of £3.1bn. This compares with 23,700 and £3.7bn in January 2016. However, it is higher than in January 2015, when there were 17,600 advances totalling £2.6bn.
Activity was driven by buy-to-let remortgage lending, which took up over two thirds of total lending. The number of loans for buy-to-let house purchase advanced in January was at an eight month low, in part due to the traditional seasonal dip in activity in the winter months.
Paul Smee, director general of the CML, pointed to tax changes and the tightening of affordability criteria in the buy-to-let sector as key factors in its performance.
“Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels. This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April,” he said.
David Whittaker, chief executive of Mortgages for Business, said the sector is fortunate to be underpinned by high demand for privately rented accommodation, “despite obstacles aimed at curbing its growth”.
He added: “It was encouraging to see that buy-to-let lending increased on December 2016, back in line with the level recorded in November 2016. Remortgaging continues to drive activity as landlords take advantage of all-time low rates. As expected, lending for purchases lags behind and it will take a while for landlords to adjust to the new environment of increased stamp duty, tougher stress tests and the imminent curtailment of tax relief.”
Whittaker said buy to let is likely to be more “muted” than in 2016, but “it still remains a viable proposition, particularly for landlords who treat property investment as a business rather than an alternative pension plan”.