The restriction of mortgage interest relief for UK buy-to-let (BTL) landlords will, in the short term, curb lending in the sector, which currently makes up 15-16% of mortgage lending, says Moody’s Investors Service.

However, the firm also reports that 2015 is on track to become the best year for BTL mortgage deal issuance since the credit crunch. 

“The government’s decision to restrict BTL mortgage interest relief reflects a willingness to put investors and owner-occupied borrowers on a more level playing field, given that the latter cannot claim tax relief on their mortgages,” said Emily Rombeau, a Moody’s Analyst.

Over the coming months, Moody’s forecasts that reduced demand for BTL properties will soften UK house price growth but it forecasts that UK house prices will nonetheless rise by up to 5% in 2015, albeit at a slower pace than in 2014.

According to the Moody’s report, the BTL market has grown at a steady pace since early 2010, accounting for 16.8% of total gross mortgage lending and 25.3% of total house purchases as of Q1 2015.