Mortgage industry insiders have expressed concern about the Government’s plans to allow the Bank of England to intervene in the buy-to-let mortgage market.
Chancellor George Osborne said last week that the Bank of England was likely to receive powers it had asked for to regulate the mortgages which landlords use to buy properties.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “The Government stated its intention earlier this year to hold a post-election consultation to assess the evidence for granting powers of direction over buy to let lending to the Financial Policy Committee (FPC). It was therefore very disappointing to hear the chancellor apparently jump the gun at yesterday’s treasury select committee. It suggests a stage of evidence-led policy making has been removed, and that the consultation may be limited to what those powers will be when – rather than if – they are granted.
Individual lenders also spoke out about the announcement. Charles Haresnape, Aldermore Group managing director, said the lender welcomed any policy to improve the private rented sector but said it was important that any powers granted do not jeopardise the buy-to-let market.
“The private rented sector is a vital component of the UK housing market and policy levers must be used to support the sector in driving additional capacity,” he said, “It is important that the financial policy committee works closely with the sector and uses any powers sparingly and appropriately, and not unnecessarily remove any momentum from the private rented market.”
Steve Griffiths, head of sales and distribution at Kensington Mortgages said it will be interesting to see what powers the Bank of England is given when further details are announced later in the year.
“The rental sector is becoming increasingly important to the UK housing market and many people are staying in rented accommodation for much longer than we have seen historically,” he said, “The quality and variety of such accommodation has improved significantly following the growth of buy to let, and it is vital that these standards are maintained in the future. It would be short sighted to limit landlords’ ability to deliver quality rented accommodation when many people rely on this sector.”