Landlords have voiced fears that they could face further sector-wide restrictions in 2017 following the Bank of England’s buy to let review.
Despite significant slowdown in the buy to let market, the Bank of England dispelled suggestions that it might loosen restrictions on the sector.
In the record of its recent Financial Policy Committee meeting, the Bank said: ‘Given the risk outlook, it was not the time to loosen standards and expose the economy to a potential amplification by households of shocks to economic activity. [The FPC] agreed to conduct a broader review in 2017 of its overall strategy for setting policy measures to guard against risks stemming from the owner-occupier and buy-to-let (BTL) mortgage markets.’
The Bank has been granted power to restrict the loans banks can give relative to the value of a property and the income of the landlord, in the same manner as in the owner-occupier sector. Further increases in regulation include changes to the treatment of mortgage interest costs and the Prudential Regulation Authority’s instruction to banks to tighten affordability criteria on loans in 2017.
Jeremy Duncombe, from mortgage brokerage the L&G Mortgage Club, is against the need for further regulation. He said: ‘We don’t feel there is any need for further interference or sanctions in the BTL market, even before the PRA changes come in in 2017, the market has already felt the impact, and there is more to come. Purchase business in BTL is down significantly, and the business that is driving lending currently is remortgages which don’t affect the market. We wouldn’t want to see further involvement in changes in the market.’