Bank of England to act if needed on the buy-to-let market

Billy Bambrough
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2015 General Election - Housing
The buy to let market has exploded since the financial crisis (Source: Getty)

The Bank of England (BoE) has said it’s ready to act if it feels the booming buy-to-let mortgage market is getting out of control.

Threadneedle Street’s Prudential Regulation Authority said it was reviewing banks’ lending criteria.

The market for buy-to-let mortgages has ballooned 10 per cent in the first nine months of this year.

Although there were no new measures to curb the number of mortgages announced along with the results of the Bank’s stress tests, the Bank said buy-to-let investors were potentially more vulnerable to market shocks.

The government is also interfering with the sector.

In the Autumn Statement, George Osborne said people purchasing buy-to-let properties and second homes will pay an extra three per cent in stamp duty from 1 April next year.

This follows changes in July to limit tax exemptions for landlords to the 20 per cent basic rate of tax.

“The FPC remains alert to financial stability risks arising from rapid growth in buy-to-let lending and will monitor developments in buy-to-let activity closely following the tax changes to the buy-to-let market announced by the chancellor in the Budget and Autumn Statement,” the Bank said.

The buy-to-let mortgage market has surged since the financial crisis and the BoE expects it to return to around pre-crisis levels.

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