The buy-to-let sector has continued to grow despite the recent changes to taxation on investment purchases for landlords, a new report has revealed.

The report, conducted by mortgage industry tech supplier, IRESS, found that the sector grew by 49 per cent compared with figures in 2015.

The 2016 study analysed the responses of 18 lenders with a combined share of gross mortgage lending of 68 per cent in 2015, totalling £152 billion of loans.

It found that the buy-to-let market had experienced the largest year-on-year growth by far, up a staggering 49 per cent.

By contrast, first-time buyers saw a 0.7 per cent increase, and residential loans to home movers actually fell by 5.6 per cent.

Henry Woodcock, Principal Mortgage Consultant at IRESS, said: “The most significant finding in the survey is the continued rise of the buy to let market. This sector has increased by more than 213 per cent over the five years since the first IRESS Mortgage Efficiency Survey.”

Meanwhile, the gross number of approvals has declined in all sales channels. Branch approvals have dropped by 20 per cent, consumer by 18 per cent, telephony by 15 per cent and by 9 per cent in the intermediary channel.

The report also found that banks have a significantly higher percentage of approvals than mutuals, likely to be due to banks investing in more sophisticated decision making and income verification, differences in “risk appetite” and application complexity.

“But with the recent change of taxation around investment purchases for landlords, it seems unlikely that this stellar growth will continue. In the last year, loans to first-time buyers have been fairly flat, suggesting that despite government incentives and innovative products offered by lenders, the struggle to get on the housing ladder remains a significant challenge,” said Mr Woodcock.

From 1 April 2016, The Government introduced a higher rate of Stamp Duty Land Tax (SDLT) for purchases on additional residential properties. The higher rates will be 3 per cent above the current SDLT rate.