Buy-to-let (BTL) purchase lending is forecast to fall by 7% to £9bn in 2025, as conditions for landlords are expected to get more challenging.
UK Finance’s projections for gross mortgage lending showed a modest recovery in landlord purchase mortgages this year, with BTL lending forecast to end on £10bn after a 13% year-on-year rise due to a fall in mortgage rates.
Changes to stamp duty, however, are expected to weigh down on activity in 2025.
Landlords must now pay a 5% stamp duty surcharge on the purchase of investment properties instead of 3% after Chancellor Rachel Reeves hiked the tax in the Autumn Budget with immediate effect. The increase applies to anyone who already owns a property and is purchasing another.
According to UK Finance, the introduction of the higher stamp duty charge will act as a further deterrent to a market that already faces heightened regulatory and taxation challenges.
The trade body said that while the BTL market has continued to adapt to meet these challenges, it still expected the market to contract next year.
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Combined gross mortgage lending across all sectors is forecast to end on £235bn this year, 4% higher than the £226bn lent in 2023, with an 11% rise in 2025 to £260bn, according to UK Finance.
