Speaking to the Treasury Committee today, Osborne said:
"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.
In June 2014, the Chancellor announced his intention to grant the Financial Policy Committee additional powers to guard against financial stability risks arising from the housing market, including limited loan-to-value and debt-to-income ratios.
At the time, the Bank of England said the Government intended to consult on buy-to-let lending later in 2015, with 'a view to building an in-depth evidence base on how the operation of the UK buy-to-let housing market may carry risks to financial stability'.
The Financial Policy Committee released a statement last month from its policy meeting, saying that there was 'no immediate case for action in the buy to let mortgage market'.
Despite this, Osborne said today:
"The governor of the Bank and the FPC have asked for additional powers over buy-to-let mortgages which weren't included, and we have granted those powers.
"I'd better wait until we actually make the announcement, but (it will be) as soon as possible."
Steve Griffiths, Head of Sales and Distribution at Kensington, commented:
“The announcement from George Osborne comes just a month after the Financial Policy Committee said it had no immediate cause to look in to the buy to let industry. Given this news, it will be interesting to see what powers the Bank is given when further details are announced later in the year.
“The rental sector is becoming increasingly important to the UK housing market and many people are staying in rented accommodation for much longer than we have seen historically. The quality and variety of such accommodation has improved significantly following the growth of buy to let, and it is vital that these standards are maintained in the future. It would be short sighted to limit landlords’ ability to deliver quality rented accommodation when many people rely on this sector.”
