Posted 29 Mar 2016
The article suggests that new changes could happen within months to restrict the availability of buy-to-let mortgages, as part of a crackdown following reactions to unprecedented house price increases. This news coincides with a report revealing initial findings into lending standards due to be released by the Bank of England on 29 March.
The Chancellor George Osborne told the Commons Treasury Committee on 24 March:
“The measures I have taken in the last couple of fiscal events – on additional Stamp Duty, on changes to mortgage interest relief – have been done in the knowledge that the Bank of England has concerns about a bubble emerging in the market.”
So many people in the UK have invested in buy-to-let properties to combat the poor returns on savings, but regulators are concerned that some could be amassing debt and a false spike in property prices might be generated.
The Financial Policy Committee (FPC) wants powers granted, which ensures regulators introduce limits on buy-to-let lending in terms of loan-to-value ratios or interest coverage rations (ICRs), i.e. the ratio of the projected rental return from the buy-to-let property versus the expected mortgage interest payments.
The new crackdown comes after this week’s launch of a 3% Stamp Duty Land Tax surcharge on the purchase of additional homes.
The Telegraph article can be found here.
by Luke Golding