IMLA: Buy-to-let controls jump the gun

Sarah Davidson

October 23, 2015

Williams, executive director of the Intermediary Mortgage Lenders Association, said: “The government stated its intention earlier this year to hold a post-election consultation to assess the evidence for granting powers of direction over buy-to-let lending to the Financial Policy Committee.

“It was therefore very disappointing to hear the Chancellor apparently jump the gun at yesterday’s Treasury Select Committee.

“It suggests a stage of evidence-led policy making has been removed, and that the consultation may be limited to what those powers will be when – rather than if – they are granted.”

Williams’ comments follow George Osborne’s announcement to the Commons Treasury Committee yesterday confirming that he would grant the FPC additional powers subject to consultation “as soon as possible”.

He said: “The governor of the bank and the FPC have asked for additional powers over buy-to-let mortgages, which weren’t included, and we are in the process of granting those powers so they have that tool as well.

“I take the governor’s view very seriously. I think it’s true that, if you look historically at the UK, one of our biggest challenges has been managing credit booms and house price cycles.

“That’s why we created the Financial Policy Committee, in part to try to manage some of those risks.”

Williams called it “somewhat ironic” that this development comes just days after Bank of England governor Mark Carney also spoke to the Treasury Select Committee about the need for a wider ‘stock take’ of financial regulations.

He added: “There is a common interest in ensuring we have a stable market for buy-to-let, and we feel this would be aided by an open debate about the case for additional FPC powers based on the strength of evidence.

“The FPC itself recently judged was that there is ‘no immediate cause to take action in the buy-to-let market’.

“Clearly there is a distinction between having powers and using them, but creating an evidence base to inform future FPC decisions is important and this process should continue.

“We must also hope the potential bias-towards-action does not exclude a sober appraisal of the facts even though the Chancellor seems to have jumped that hurdle.”

Last month the Bank released a statement saying buy-to-let could amplify housing and credit cycles because landlords are more likely to respond to falling house prices by selling their properties.

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