Bank of England could rein in the Buy To Let market

The Bank of England expresses concern about the UK’s buy-to-let property market.

26814615The Bank’s governor, Mark Carney, said he was concerned about high levels of lending to landlords and that the Bank would take action.

“There are a number of things happening … we are watching it closely and we will take action,” he told the FT.

Mr Carney said the problem was that investors might sell their properties at the same time if house prices fell.

In September, the Bank’s Financial Policy Committee (FPC) made a similar warning about the buy-to-let market.

The committee, which is led by Mr Carney, said the growing market posed a threat to the UK’s financial stability.

“The stock of buy-to-let lending might be disproportionately vulnerable to very large falls in house prices,” the FPC said.

Buy-to-let rush?

Since the FPC’s warning, Chancellor George Osborne has announced that stamp duty rates will rise steeply for anyone buying a home that is not their main residence – which would include buy-to-let investors as well as second-home buyers.

But with the higher rates of duty only starting at the beginning of the next financial year, there are worries that there may be a rush by some would-be landlords to buy properties before then, which might help to push up house prices even further.

Lending to landlords has grown rapidly in recent years.

There are now 1.7m buy-to-let mortgages, making up about 16% by value of the total stock of all outstanding mortgages.

Each year, more than two million individual landlords declare rental income to HM Revenue & Customs in their tax returns.

For the 2012-13 financial year, 2.1 million taxpayers declared income from property, up by more than a third from the 1.5 million in 2007-08.

Earlier this year, Mr Carney said the Bank was in discussions with Mr Osborne about obtaining greater powers to regulate the buy-to-let mortgage market.

Excerpt of article kindly shared by the BBCread the article in full

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