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Is buy-to-let regulation on the cards?

Written by: Christina Hoghton
Buy-to-let mortgages could become less attractive if the sector faces effective regulation from the Bank of England.

Last week HM Treasury opened a consultation into handing the Bank of England powers of direction over the buy-to-let mortgage market.

This would mean effective regulation of the sector, with loan-to-value limits imposed as well as restrictions on the minimum rental cover that lenders are allowed to offer on their buy-to-let deals.

If the Bank of England’s Financial Policy Committee is handed the powers, it could mean that buy-to-let mortgages become more difficult for landlords to access, as lending criteria would potentially become tighter.

Paul Smee, director general of lender trade body, the Council of Mortgage Lenders, said: “In our view, buy-to-let does not constitute a market that currently requires further macroprudential intervention, especially as the effect of several recent tax changes is yet to be fully felt and evaluated.

“We urge policymakers to be mindful of the risk of unintended consequences that could adversely affect the private rented sector, alongside their focus on ensuring that the buy-to-let market does not pose a threat to financial stability.”

The Consultation on Financial Policy Committee powers of direction in the buy-to-let market closes on 11th March 2016.

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