Bank of England given new powers to curb buy-to-let lending

Tom Wilson
17 November 2016

The Bank of England will be granted new powers to curb mortgage lending for buy-to-let investors to protect the economy from a possible collapse in the sector, it was announced on Wednesday.

From early 2017, the Bank will have the authority, via the UK financial regulators, to limit buy-to-let mortgage lending, both in terms of loan-to-value limits, and affordability of repayments.

The latest move succeeds previous recommendations from the Bank that it should have the power to intervene in the buy-to-let mortgage market, as well as the mortgage market, to ensure borrowers would be able to survive a rate rise.

 

Philip Hammond, Chancellor of the Exchequer says: “It is crucial that Britain’s independent regulators have the tools they need to keep our financial system as safe as possible.

“Expanding the number of tools at the Financial Policy Committee’s disposal will ensure that the buy-to-let sector can continue to make an important contribution to our economy, while allowing the regulator to address any potential risks to financial stability.”

This latest blow to buy-to-let investors follows the introduction of an extra layer of stamp duty for buy-to-let investors, and the reduction in tax relief on mortgage interest, which will begin in April 2017. In October a legal challenge from private landlords to block the incoming changes on mortgage tax relief was rejected by London’s High Court.  

If you’re a buy-to-let investor and are worried about the future, read our feature How to move on from buy to let.

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