The granting of powers that will give the Bank of England’s financial policy committee (FPC) more control over buy-to-let (BTL) lending next year was an interesting move.
Not least because, as many of you pointed out, the property bubble which BTL has been largely attributed with helped create in pockets of the UK, has all-but likely reached its peak.
The introduction of limits on buy-to-let mortgage lending will apply to loan-to-value ratios and interest coverage ratios and the regime will be introduced two years after the government granted the FPC powers over the residential mortgage lending market.
But the fast and loose lending it is aimed at taming has already wrecked havoc on the UK’s housing market. In fact it has skewed it to such an extend that in some parts of the UK having a household income of £100k will not even buy you a one bedroom flat.
I’ve told readers of my own experience - whereby we attempted three times to put an offer in on two bed houses and flats in our commuter-belt town only to have been beaten to it every time by a cash buyer.
So why this move? Why now when it would have been better years ago? Two explanations. One, no one really thought BTL would have had such a detrimental impact it has. Or that the demographic who make up the majority of BTL investors are precisely those that were more likely to vote. Now though the tide appears to be turning and younger voters are starting to make their influence felt, and they are not happy. Investing in residential property, when the UK has a housing shortage - should be banned. Time now to invest in our younger generations and make sure that their needs - including a roof of their own over their own heads - are met.
