The UK Buy to Let report – produced by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR) – forecasts BTL market activity up to 2023 and compares this projection with a scenario in which the government’s various policy interventions were not introduced. 

The analysis is then able to give an idea of the magnitude of these measures and how they have affected the BTL market.

This latest report has revealed a marked change in BTL activity following government intervention, with the number of BTL mortgage approvals for house purchases falling in 2016 by 13%.

This was followed by a steeper fall of 27% in 2017 as the sector adjusted to new regulation.

The report expects this transformation will continue until 2021, but this will be less severe than the market has experienced in recent years as strong demand in the private rental sector and a ‘core’ of professional landlords counter the effects.

The research predicts moderate growth in the BTL market from 2021 in the years leading up to 2023.

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In contrast – under the no-reform scenario – Shawbrook would have expected the share of BTL mortgages to have stayed higher for longer, averaging at around 13% between 2018 and 2023, compared to 7% under the new scenario analysis.

Meanwhile, the analysis estimates that 360,000 more BTL mortgages would have been issued if the changes to the tax system and underwriting process had not occurred.

Karen Bennett, managing director for commercial mortgages at Shawbrook (pictured above), said that while the series of government and regulatory changes had made a significant impact on the market, it had seen the impact felt more heavily among the amateur landlord community, presenting an opportunity for professional investors.

“Recent political turbulence has had an amplifying effect on investor confidence but, positively, the market remains buoyant for those with a long-term strategy who draw upon specialist advice to fully understand the impact of these policy shifts.

“Regulatory change that supports the public interest is not something to be afraid of, and we predict that this high performing asset class will remain a fundamental strength over the long-term provided lenders continue to adapt and change alongside it.”