The government’s decision to grant the Bank of England’s Financial Policy Committee greater powers over the buy-to-let market looks set to make it even harder for landlords to get a mortgage, illustrated by the fact that officials at the Bank of England have already raised concerns about buy-to-let lending with major UK banks.
Large mortgage lenders have reportedly interpreted the ‘concerns’ as a sign to rein in their mortgages for landlords.
According to the Financial Times, supervisors from the central bank’s Prudential Regulation Authority (PRA) have already visited lenders in the past two weeks to express concern over the buy-to-let market.
One source told the newspaper that while the PRA did not tell banks to stop extending buy-to-let loans, the message was clear - “we think you have enough buy-to-let loans”.
The introduction of fresh stress tests for landlords, along with the launch of the 3% stamp duty surcharge in April and the scrapping of the 10% Wear and Tear tax relief for landlords have already caused a significant fall in lending, while mortgage tax relief is set to be phased out from next year.
One senior UK banker said the Bank of England was “concerned” about aggressive lending practices at some banks, but various mortgage lenders have already restricted their risk appetite in this area.
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