Record borrowing figures as buy-to-let landlords rush to beat tax changes

Gross mortgage lending reached £17.9 billion in January this year, the highest lending total for a January since 2008, according to the Council of Mortgage Lenders (CML).

The figure is 21% higher than the £14.8 billion lent in January last year, and experts are attributing the high level of mortgage borrowing to a surge in buy-to-let landlords looking to buy properties ahead of tax changes due to be implemented in April.

From the start of the 2016/17 tax year, most landlords will pay a 3% surcharge on stamp duty on property purchases.

The CML’s members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. The organisation’s economist Mohammad Jamei said: ‘Lending started the year on a positive note. Our monthly estimate is 21% higher than a year ago, with the current growth rate in lending similar to the closing months of 2015.

‘We still only see limited upside potential going forwards, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. Upcoming tax changes in the buy-to-let sector are adding an element of uncertainty to the market.’

However, the CML did also partly attribute the high January borrowing figure to positive economic factors. Mr Jamei said: ‘UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand.’

Although much higher than previous January figures, the £17.9 billion total is actually 9% lower than December’s lending total of £19.8 billion.