Industry reacts to buy-to-let regulation announcement
The chancellor confirmed at yesterday’s Treasury Select Committee that the Bank of England’s Financial Policy Committee (FPC) will be granted powers to intervene in the buy-to-let market ‘as soon as possible’.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said the Government had stated its intention earlier this year to hold a consultation to assess the evidence for granting powers of direction over buy-to-let lending to the 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,” he said,
“It seems somewhat ironic that this development comes just days after Mark Carney also spoke to the select committee about the need for a wider ‘stock take’ of financial regulations. There is a common interest in ensuring we have a stable market for buy to let, and we feel this would be aided by an open debate about the case for additional FPC powers based on the strength of evidence.”
Steve Griffiths, head of sales and distribution at Kensington Mortgages, pointed out that yesterday’s announcement came just a month after the FPC said it had no immediate cause to look in to the buy-to-let industry.
“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. 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.”
During a Treasury Select Committee (TSC) meeting yesterday, Osborne was asked by committee member Chris Philp MP for Croydon South whether he shared concerns aired by Bank of England governor Mark Carney about the buy-to-let market.
Addressing the TSC, Osborne said he took Carney’s views on the buy-to-let market ‘very seriously’.
“It’s true that if you look historically at the UK, one of our biggest challenges has been managing credit booms and house price cycles and that’s why we created the Financial Policy Committee in part to try and manage some of those risks. One of the problems with the system I inherited was that no one was looking out for overall debt levels in society and no one was looking at particular problems in particular sectors like housing,” he said.
“We have given the FPC powerful tools to, for example, tighten mortgage standards if they feel there’s a credit bubble developing. The governor of the Bank and the FPC have asked for additional powers over buy-to-let mortgages which weren’t included [in the Financial Stability Report] and we have granted those powers so they have that tool as well.”