Mortgages  

Gov’t to listen to industry on BTL rules

Gov’t to listen to industry on BTL rules

The Financial Policy Committee’s potential powers to limit LTV or debt-to-income ratios in the buy-to-let sector could affect the wider economy, the CML has warned.

The Treasury is set to publish a public consultation on proposals for macro-prudential regulation and powers of direction for the FPC on BTL lending before the end of 2015.

However, in a statement, the CML said the Treasury was seeking to ensure that the FPC had appropriate powers.

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According to the statement, Matthew Browne, head of the mortgage unit at the Treasury, told the CML that the government was interested in how any proposals would affect the sector and wider economy.

As part of the consultation, the government said it would be speaking to a wide variety of stakeholders and welcomed industry views.

The CML statement said: “We have been working with the authorities to provide information and data on the BTL sector, and the Treasury is urging individual firms, and brokers and landlords, to do the same. We will also be consulting widely with members when the Treasury publishes its proposals, before submitting our formal response to its measures,” the industry body said.

A spokesman for the Treasury said: “Building a stronger and safer financial system is a key part of the government’s long-term plan to provide economic security for working people, which is why the independent Bank of England has been put back at the centre of ensuring emerging risks to financial stability are identified, monitored and effectively addressed.”

Adviser View

Daniel Bailey, mortgage broker at Derbyshire-based Middleton Finance, said: “It is inevitable that regulation will come, because BTL is such a big market – over the past 18 months it has been the biggest growth sector.

“A lot of lenders require a minimum personal income of £25,000 a year. Lenders have taken a pragmatic view asking what happens if a property is not occupied over a period.

“We will need to see how far the regulation goes and what constraints they introduce. It is about finding the middle ground – they must be careful not to go too far.”