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TODAY'S OTHER NEWS

Buy-to-let sector escapes Bank crackdown

The Bank of England has ruled out intervention in the UK buy-to-let market despite fears that its growth could pose a threat to the British economy.

The Bank’s Financial Policy Committee (FPC) said on Friday that there was “no immediate case” for action by regulators in the sector

In July, the Bank warned that the rapid expansion of the buy-to-let market since the financial crisis of 2008 potentially threatened the UK’s financial stability because of the risk of overinvestment.

Bank officials said that expansion of the buy-to-let sector could help drive house prices even higher, possibly leading homeowners to take on unnecessarily high levels of debt.

But the FPC said in a new report that it was now satisfied that lenders were generally not offering landlords mortgages at excessively high loan-to-values, and that there was “little evidence that the underwriting standards of major lenders have fallen”.

However, the Bank has reserved the right to intervene in the market in the future if it feels that credit is being offered too freely to landlords.

The report said: “The FPC is alert to the rapid growth of the market and potential developments in underwriting standards. As the market continues to grow, particularly if driven by loosening of underwriting standards, the sector could pose risks to broader financial stability, both through credit risk to banks and the amplification of movements in the housing market.”

According to the Bank of England, the outstanding stock of buy-to-let lending has risen by 40% since 2008. During the same period, the stock of lending to owner-occupiers is up just 2%.

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