The Governor of the Bank of England (BoE), Mark Carney, has yet again expressed concern over the boom in the buy-to-let market.
Mark Carney Expresses Yet More Buy-to-Let Concerns
He reports that further analysis of the sector has begun, in response to the growth in loans to private landlords.
Responding to questions from MPs about possible risks to the economy, Carney said: “We think developments in the buy-to-let market have warranted heightened scrutiny and have done so for some time.
“As a general rule, any time you see a very sharp and sustained increase in activity in one area… it at least bears heightened scrutiny.”
Data from the BoE reveals that lending to landlords has surged from 8.8% of all new loans eight years ago to 14.5% last year.
In its December financial stability report, the Bank warned that its Financial Policy Committee (FPC) “stands ready to take action if necessary”.
Carney then told the Treasury Select Committee that the Bank would study the impact of changes to landlord taxes proposed by George Osborne.
“We want to assess the implications of those in assessing the overall implications for stability of developments in buy-to-let,”1 he stated.
From 1st April, landlords will see a reduction in mortgage interest tax relief, a change to the Wear and Tear Allowance, and a 3% extra Stamp Duty charge on investment properties. Find out more about the financial changes here: /landlords-and-agents-warned-that-buy-to-let-mortgages-could-crash/
An external member of the FPC, Martin Taylor, reinforced Carney’s statement: “We are expressing mild concern about buy-to-let.”1
Carney also told MPs that he will decide by the end of this year whether to extend his time as the Bank’s Governor.
1 http://www.standard.co.uk/news/uk/bank-boss-alarm-at-buy-to-let-housing-boom-a3165351.html
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