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Nationwide’s mortgage lending plunged in the April to June quarter as buy-to-let borrowers stayed away from the market after the phasing out of tax relief on mortgage interest was introduced at the start of April.

Last year, landlords were hit by a 3% hike in Stamp Duty if they purchased more properties.

The building society said that net mortgage lending collapsed by 31% between April 5 and June 30 this year, from £3.5bn to £2.4bn.

Buy-to-let lending halved to £800m.

A spokesperson for Nationwide said the lender expected buy-to-let lending to remain broadly flat.

The fall meant that Nationwide, the UK’s second largest buy-to-let lender behind Lloyds, saw a 20% fall in profits, with its share of the mortgage market slipping from 15% to 13%.