The value of residential loans to individuals within the buy-to-let (BTL) sector has fallen by 8% since 2016, according to new research carried out by Octane Capital.

The specialist lender suggested that several government changes to BTL profitability have reduced landlord appetites over the last six years, with the value of loans dropping from £40.1bn that was lent in 2016, to £36.9bn.

The most notable legislative changes included the restrictions of tax relief on mortgage finance costs, the abolition of the “wear and tear” allowance, a 3% increase on the rate of stamp duty payable on BTL properties, and an accelerated payment schedule regarding Capital Gains Tax due.

Octane Capital’s research confirmed that it is not just the total value of loans issued that has fallen, but also the overall proportion of total lending. Last year, the £36.9bn loaned via the BTL sector accounted for just 11.7% of total lending, marking a 4.4% drop on 2016, when BTL loans accounted for 16.1% of the total sum lent.

“It’s undeniable that the war waged on the nation’s landlords has certainly taken its toll and in the last five years the government’s numerous dents to profitability have stifled investor appetites somewhat,” commented Octane Capital CEO, Jonathan Samuels.

“However, it’s fair to say the sector is still standing strong and the reduction in the total value of BTL loans issued in the last five years has been marginal when compared to where we still stand today versus a decade ago.

“At the same time, we’ve also seen the introduction of numerous government measures designed to entice buyers, drive demand and keep house prices buoyant. This has inevitably led to a notable increase in loans issued to other buyer types, first-time buyers included, which has further skewed the overall share of lending accounted for by the BTL sector.

“The good news is that while the BTL sector may be looking a tad weary, it’s far from on the ropes, and we continue to see strong demand from investors despite the government’s best efforts.”

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