The Bank of England has announced that it is to consider looking at new ways to regulate the practice of mortgage lending for buy-to-let purchases. This announcement comes as the government consults about whether to let the Bank of England take control over this sector.
Bank of England staff have been asked to collate evidence applicable to buy-to-lets, that will be submitted as part of the consultation later on in the year. Last year, the bank requested increased regulatory powers to control this type of property purchase, where investors take out a mortgage in order to purchase a house or flat, which they intend to rent out in the private sector, or via a housing association.
However, the finance ministry stated that it would need to conduct further investigations before going on to grant such powers.
Requests for buy-to-let mortgages have been increasing at a rapid rate, and this type of lending now accounts for some eighteen percent of total mortgage applications, following a significant 8% increase in the last year.
The bank will now be required to outline what kind of framework they would apply to this type of lending practice.
In 2014, the Finance Policy Committee decided to impose a cap on higher loan to value mortgages taken out for residential use. Many economists believe that this was one of the key reasons that the property market eased off significantly during the third and fourth quarters last year.
The Financial Policy Committee records also disclose that they held emergency discussions about the current dire financial situation Greece at the end of last month. However, detailed minutes have not, as yet, been released beyond the remarks made by Mark Carney, Governor of the Bank of England, that are already in the public domain.