"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"
From early 2017, the FPC will be able to direct the PRA and FCA to require regulated lenders to place limits on buy-to-let mortgage lending in relation to LTV ratios and interest coverage ratios.
The government says this will help the Committee "protect the financial system from future risks in the buy-to-let mortgage market".
It follows the FPC recommending that it be given additional powers of direction over both the residential mortgage lending 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 Chancellor of the Exchequer, Philip Hammond, said: "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."
Karen Bennett, Managing Director for Shawbrook Bank Commercial Mortgages, commented: “We will need to wait to see how the FPC choose to use these powers given the recent clarification of the PRA consultation paper and subsequent requirements. Regulation that effectively supports and protects the customer should always be welcomed, however it would seem logical that the new standards revealed in October and set to be implemented officially in January, are given the time to bed in prior to deploying any additional measures.”
