Recently the bank of England has been taking steps to control the housing market, primarily by introducing stricter controls on mortgage lenders (See “Plans to curb the property bubble” post ).
Until now these changes have only applied to residential mortgages not the buy-to-let mortgages landlords use, but according to minutes published this week, that may be about to change. The Financial Policy Committee (FPC) “considered the need to monitor mortgage lending activity beyond the scope of the recommendation. This included close monitoring of the buy-to-let market”.
Obviously a housing boom and bust could hit landlords as it would any other home owner, and reckless lending in this part of the market could lead to problems in the future. But the government and Bank of England need to tread carefully here as excessively tight controls will restrict the number of rental properties available, pushing prices even higher for renters and reducing quality.
At the moment the Bank of England has only said that the “FPC with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) would monitor developments in this market” so there are no changes yet, but any landlord or property investor that is thinking of remortgaging a property could be wise to do it sooner rather than later.
To see the full report from the Bank of England click here