Chancellor George Osborne has decided to give the Financial Policy Committee powers to place controls on the buy-to-let market.
The Treasury had been due to consult on whether to give the FPC powers over the buy-to-let market after giving it the power to cap LTIs and LTVs in the owner-occupied.
Speaking in front of the Treasury select committee today, Osborne confirmed he had taken the decision to grant the committee powers over the sector but go into specifics about the devices available to it.
He said: “The governor of the Bank of England and the FPC have asked for the additional powers and we are in the process of granting those.”
Asked how his comments relate to the Treasury’s plans for a consultation on the changes, the Chancellor responded that the exchequer would chiefly be considering “how they have those powers”.
He added that he hopes the FPC will be able to exercise its new abilities “as soon as possible” after they are formally granted.
However, just last month the FPC said it had no “no immediate cause” to take action in the buy-to-let market. But it did say it is “alert” to the sector’s rapid growth and “potential developments in underwriting standards”.
Intermediary Mortgage Lenders Association executive director Peter Williams says it is “disappointing to hear the Chancellor apparently jump the gun” before the Treasury consultation.
He says: “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.”
He adds: “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.”