A 7% fall in BTL lending has been forecast for next year, with UK Finance anticipating only £9bn of new volumes for 2025.
This is against a backdrop of higher property lending activity in general with UK Finance expecting £260bn to be lent in 2025, up 11% from this year.
Next year’s predicted fall in new BTL lending comes after this market grew in 2024. This year, £10bn in volumes for new BTL lending was recorded, up 13% from 2023.
Reflecting on this year’s increase in activity, UK Finance attributed this to cost and rate pressures which drove a contraction of the market in 2023.
A lowering of mortgage rates in 2024 has helped ease some of these pressures, however UK Finance sees a more challenging outlook for the sector.
This specifically relates to the 2% stamp duty surcharge announced in the Autumn Budget which may deter more potential landlords from entering the market.
Commenting on this data in total, UK Finance head of analytics James Tatch 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 BTL lending in 2025.
“The prudent underwriting standards in place for the past decade have helped most customers who might have fallen into difficulty. Arrears look to have peaked early in 2024 before falling back, and we expect them to fall again in 2025.”
