Nationwide Building Society’s profits plunged by 18 per cent in its first quarter as the buy-to-let market slumped following the government's tax clampdown on the practice.

The building society’s pre-tax profits tumbled to £322million for the three months to June 30 from £401m a year earlier.

Last year's results were propped up by a £100m gain from the sale of its investment in Visa Europe.

Profit drop: Nationwide’s profits plunged by almost 20 per cent in the first quarter as it pulled away from the buy-to-let market.

Despite the profit drop, Nationwide increased its new current account holders by 17 per cent in the same period.

At the same time, the building society’s gross mortgage lending slipped to £8.1billion from £8.6bn between the first quarters of 2016 and 2017.

The company put the decline down to a ‘reduction in buy-to-let advances’ stemming from the increased stamp duty for new properties that came in last year and changes to its lending criteria.

The Royal Institute of Chartered Surveyors said this week that a fall in house prices has spread from London to other parts of the UK with political uncertainty and tax changes continuing to weigh on the top end of the housing market.

Chief executive Joe Garner warned that while consumers don’t believe Brexit will impact their ability to access credit, according to Nationwide research, the company was braced for a period of potential ‘prolonged economic uncertainty’.

‘It will be important for lenders to balance carefully credit supply with affordability as we seek to support the long-term interests of consumers in a responsible way through any potential economic slowdown ahead,’ he said.

‘In a period of potentially prolonged economic uncertainty and persistently low interest rates, Nationwide continues to invest in products and services to support the long-term needs of our members.’

Stark warning: Chief executive Joe Garner warned that while consumers don’t believe Brexit will impact their ability to access credit, the company was braced for a period of potential ‘prolonged economic uncertainty.’

His remarks come in the wake of concerns expressed by the Bank of England, which has given UK lenders a September deadline to show they are adequately protected against risks as borrowing soars.

Garner added that the company’s profit remained within its ‘target range’.

Nationwide also said that more people opened a current account with the building society than with any other provider with 202,000 new customers in the first quarter.

Price fall: The Royal Institute of Chartered Surveyors said this week that a fall in house prices has spread from London to other parts of the UK.

Meanwhile impairment losses from loans and advances that could not be paid back more than doubled from £16m to £36m.

The building society’s net interest margin remained stable at 1.35 per cent, while loans and advances were flat at £189.5bn.

The company has pared back its business model in recent months, cutting product lines such as car insurance and inheritance tax and planning to focus on its core home loans product.

A separate report today from the EY ITEM Club said the UK's financial services sector was braced for a slowdown as choppy economic conditions put the brakes on mortgage and business lending next year, although consumer credit is expected to grow.