Moody’s: BTL lending to slow in short-term

Mortgage Introducer

August 4, 2015

Moody’s commented: “We expect that the restriction of mortgage interest relief for BTL landlords announced in the budget will, in the short-term, curb BTL lending, which currently makes up 15%-16% of mortgage lending.”

In July Chancellor George Osborne announced that from April 2017 the rate of tax landlords can claim back will gradually fall from 45% to 20% by 2020.

Emily Rombeau, a Moody’s analyst, said: “Over the coming months, Moody’s forecasts that reduced demand for BTL properties will soften UK house price growth.

“Moody’s forecasts that UK house prices will nonetheless rise by up to 5% in 2015, albeit at a slower pace than in 2014.”

She added: “The government’s decision to restrict BTL mortgage interest relief reflects a willingness to put investors and owner-occupied borrowers on a more level playing field, given that the latter cannot claim tax relief on their mortgages.

“First-time buyers’ affordability has declined, as they struggle to get on to the property ladder. Affordability constraints and demographic changes have increased the share of privately rented housing – this sector’s evolution has strongly contributed to the rapid growth of the BTL sector in recent years.”

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