The Bank of England’s Financial Policy Committee will get new powers to help it protect the financial system from future risks in the buy-to-let market next year, according to HM Treasury.
From early 2017 the FPC can order the Prudential Regulation Authority and Financial Conduct Authority to get lenders to place limits on buy-to-let mortgage lending in relation to loan-to-value and interest coverage ratios.
The Treasury announcement follows the FPC asking for extra powers over the residential mortgage market and the buy-to-let mortgage market in September 2014.
The government granted the FPC powers over the residential mortgage lending market in April 2015.
The government then consulted on the FPC’s recommended powers relating to the buy-to-let market from 17 December 2015 to 11 March 2016.
Chancellor of the Exchequer Philip Hammond says: “It is crucial that Britain’s independent regulators have the tools they need to keep our financial system as safe as possible.
“Expanding the number of tools at the Financial Policy Committee’s disposal will ensure that the buy-to-let sector can continue to make an important contribution to our economy, while allowing the regulator to address any potential risks to financial stability.”