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TODAY'S OTHER NEWS

Treasury lines up new buy-to-let crackdown

The Treasury has launched a consultation on giving the Bank of England more powers to control buy-to-let and could introduce new lending restrictions from next year.

The Bank may be given the power to limit the proportion of high-LTV buy-to-let mortgages lenders can offer, or limit loans to landlords whose rental income only just covers their mortgage repayments.

Bank governor Mark Carney recently asked for its Financial Policy Committee to be given powers over the interest coverage ratio in buy-to-let calculations, in a bid to cool the market.

He has claimed that buy-to-let is risky as landlords may be tempted to sell up if interest rates rise of house prices fall, accelerating market swings.

Buy-to-let has enjoyed another buoyant year forecasters say that rental returns are likely to sky-rocket in the years ahead.

This is despite George Osborne's tax crackdown, limiting tax relief and introducing a surcharge on stamp duty aimed squarely at investors.

The consultation period over the Bank’s new powers run until March with restrictions introduced by the summer.

Paul Smee, director general of the Council of Mortgage Lenders, denied the buy-to-let market needed yet more protection.

“We understand the rationale for putting the macroprudential tools at the Bank of England’s disposal, but also recognise that this does not necessarily mean they will be used.

“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.”

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