BOE to get new regulatory powers over BTL

Graham_Devon

Surprised to see this hasn't been posted up already. Maybe it's best not mentioned!?

The government is to consult on new powers to allow the Bank of England to rein in the buy-to-let mortgage market.

In April this year, the Bank was given extra tools to control the residential mortgage market.

Those powers could now be extended to limit borrowing by landlords who buy property to rent out.

Now the Treasury has suggested that the Bank could order banks and building societies to limit the sums they lend to landlords.

This could either be done by taking into account the size of the loan in relation to the property's value, or by taking into account whether the landlord's rent covers his or her mortgage payments.

Some seem to be suggesting we could be seeing BTL borrowers having to show that the rental income will be 150% of the mortgage. We could also see the minimum deposit raised to 40%.

Fantastic if it works.

http://www.bbc.co.uk/news/business-35120511

Carl31

There certainly seems to be a lot of flap about BTL at the moment, seems that a day doesnt go by where another potential restriction is mentioned

Either, all of a sudden, the penny has dropped regarding its effect on the economy, or theres a panic to prevent some sort of potential disaster

at least its being addressed now

westernpromise

The problem of course is that if you tax BTL out of existence you have to replace private rented accommodation with something else. There is no reason to imagine everybody who rents wishes or would be able to buy. This doesn't appear to be receiving any thought at all.

It does suggest that if you own rental property and don't have large mortgages on it you'll be coining the rent in when rental scarcity bites.

Thrugelmir

Carl31 wrote: »

There certainly seems to be a lot of flap about BTL at the moment, seems that a day doesnt go by where another potential restriction is mentioned

Either, all of a sudden, the penny has dropped regarding its effect on the economy, or theres a panic to prevent some sort of potential disaster

at least its being addressed now

Takes time to formulate policy. Was mortgages, then Payday loans and now BTL. Lot of work with regards to credit cards as well.

The farmer is using the sheep dogs to round up the sheep and put them back in the pen.

Carl31

westernpromise wrote: »

The problem of course is that if you tax BTL out of existence you have to replace private rented accommodation with something else. There is no reason to imagine everybody who rents wishes or would be able to buy. This doesn't appear to be receiving any thought at all.

It does suggest that if you own rental property and don't have large mortgages on it you'll be coining the rent in when rental scarcity bites.

BTL has been around about 20 years, what did people do before that? There was still a rental market surely?

I suppose we would see social housing agencies buying up the stock for their use in part

michaels

The same people getting very excited about btl bashing were also those who thought that the 20% price falls and restriction of 'liar loans', 'together finance' etc in 2008/9 would make housing more affordable for those who were trapped in rental.

I am very old fashioned and can't see how any measures other than increasing supply of housing or reducing incomes will result in lower housing costs.

Graham_Devon

michaels wrote: »

The same people getting very excited about btl bashing were also those who thought that the 20% price falls and restriction of 'liar loans', 'together finance' etc in 2008/9 would make housing more affordable for those who were trapped in rental.

FFL, HTB, Interest rates crashing, SMI, QE.

All stuff that probably wasn't envisaged.

And I'm sure theres lots more of it to come.

ukcarper

Carl31 wrote: »

BTL has been around about 20 years, what did people do before that? There was still a rental market surely?

I suppose we would see social housing agencies buying up the stock for their use in part

In 1991 private renting was less than 10% and decreasing by 2011 it was 18% and rising. Without BTL there would have been a severe shortage of rental properties.

Thrugelmir

ukcarper wrote: »

In 1991 private renting was less than 10% and decreasing by 2011 it was 18% and rising. Without BTL there would have been a severe shortage of rental properties.

Somebody would have bought the property.

Thrugelmir

Carl31 wrote: »

BTL has been around about 20 years,

Barely 17 years. All in economic and financial good times. Let's see how it fares in the next 17. Past performance is no guide to future.

ukcarper

Thrugelmir wrote: »

Somebody would have bought the property.

The majority would not have been bought to let out so we would still have a shortgage of rental property although property prices might be slightly cheaper.