Mortgage Industry experts have criticised the government over plans to grant the Bank of England extended powers over the buy-to-let mortgage market.
Chancellor George Osborne said last week that the Bank of England’s Financial Policy Committee would be given powers it had previously asked for to regulate buy-to-let mortgages.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, 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.
“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.”
He also said there was a common interest for ensuring a stable market for buy-to-let and called for an open debate on the case for additional powers.
Martin Wilkinson, founder of Buy2Let.com, said there was no real cause for concern as buy-to-let made up only 15% of all mortgage debt and the loans were less risky than traditional owner-occupier loans.
“The fact that buy-to-let makes up 20% of new mortgage lending should not be cause for worry either. Firstly, the Bank of England’s low interest rates means that average buy-to-let yields easily outstrip net returns from other asset classes such as bonds, annuities, cash at the moment.
“Secondly, last April, Chancellor George Osborne introduced pension reform to provide freedom from ultra-low return annuities, so of course, this has encouraged some of the released pension money to enter the property investment sector – augmented by mortgage finance.”
The BoE has previously warned that the buy-to-let market is a potential threat to the UK’s economic recovery as borrowers could be exposed following a downturn, which could hit the wider housing market and economy.
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Rather than discourage BTL investors the government should be very supportive. With very little social housing and even less intended for the future, the private rental market is paramount for people who cannot afford to buy. If the government start to put an extra burden onto landlords local government could find themselves struggling with the homeless. I am not affiliated to any party but it seems to me that this government needs to get a grip on real life and what is happening out there with the working class. Get your head out of that large cloud and see that the private landlord is doing you a huge favour. Of course they are making a profit, after all it is a business and you don’t find the local supermarket giving away food at the door. Let’s see a different attitude to this issue and.if any legislation needs to be introduced lets just make sure it’s for the homes to be safe and comfortable for people to live in.
Do you realise the consequence of all these people using their pot of money for buy to let. All the small terraced houses usually bought by first time buyers is now bought for investment leaving them to mortgage themselves to the hilt to get bigger houses which in turn moves actual other buyers without and house prices spiking. For example a small terrace going for £159 being sold one year on for £205, nothing being done to the property. The market is over heating it will crash unless you open your eyes and see what is happening. When it crashes all those pension pots are lost and then those investors do what.
> There was no real cause for concern as buy-to-let made up only 15% of all mortgage debt.
> The fact that buy-to-let makes up 20% of new mortgage lending should not be cause for worry either.
Uhh hellooo! No problem that people with money and no lending limits set by income compete with first time buyers, forcing prices and rents up, preventing them from saving up a deposit?
And that buy to lets are now a large fraction of these smaller homes?
Of course not, unless you are not one of the people priced out!