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Carney expresses buy-to-let concern

Bank of England governor Mark Carney has once again expressed concern at the rapid boom in the buy-to-let market.

Answering questions from MPs about potential risks to the economy, Carney said: “We think developments in the buy-to-let market have warranted heightened scrutiny and have done so for some time.

"As a general rule, any time you see a very sharp and sustained increase in activity in one area… it at least bears heightened scrutiny.”

Bank of England figures show lending to landlords has surged from 8.8% of new loans eight years ago to 14.5% last year. The bank warned in its December financial stability report that its financial policy committee “stands ready to take action if necessary”.

Carney told the Treasury Select Committee the Bank will examine the effect of tax changes brought in by George Osborne to calm the market. 

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    I'd suggest that Mr Carney would indeed be very wise to look at the effects of what the Chancellor has introduced in the form of Clause 24. There will be severe consequences for tenants and the wider economy.

     G romit

    Of course Carney should be worried; Clause24 is in itself a major destabilising factor, and is likely to precipitate the threat to the economy that he is concerned about.

  • Andrew McCausland

    I agree with you John. The issue of increased stamp duty for second home / BTL buyers has had most of the press coverage to date. Whilst nobody wants to pay more tax it is understandable in the current political and economic climate. Landlords are an easy target and despite this additional tax BTL is still a sound long term investment.

    Clause 24 is a different matter. It will destroy the business model of established landlords who have bought in their personal names rather that in a company structure. Taxation of turnover rather than profit runs against every tenet of business accountancy. I am aware of a number of landlords with larger portfolios who would be forced into bankruptcy by this change if implemented as planned.

    George - you need to listen to the industry. This is an ill thought out measure.

    My view is that the more important change is in fact Clause 24.

  • Jason McClean

    Restricting lending to BTL or increasing the cost of new lending would slow down the BTL market without pushing existing landlords out of the sector the way C24 is. I expect Carney would have taken a much different approach to Osborne. But Osborne has his corporate benefactors to look after...


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