The economic outlook for the buy-to-let sector will be “challenging” in 2025 due to the extra tax burden affecting landlords, mortgage lenders’ trade body UK Finance has predicted.
In the Budget the Labour government opted to increase the stamp duty surcharge from 3% to 5%.
Meanwhile the Renters’ Rights Bill, which is expected to come into force this year, will introduce rules like periodic tenancies, as well as the Section 21 eviction ban.
Due to these factors, UK finance predicted a 7% drop in mortgage lending for buy-to-let purchases in 2025.
James Tatch, head of analytics at UK Finance, said: “In 2025 we are forecasting continued steady growth in both house purchase and remortgage lending as affordability improves further. We are however forecasting a slight fall in buy-to-let lending in 2025.”
In 2024 the buy-to-let sector saw a “modest recovery”, as house purchase lending to landlords grew by 13% to £10 billion.
This is expected to go in reverse in 2025, bringing purchase activity to £9 billion.
Things look more positive for the residential sector, as new lending is expected to rise by 10% to £148 billion – signalling that owner-occupiers are set to take a bigger share of the housing market.
