Buy-to-Let – Disproportionately Vulnerable to Very Large Price Falls

BofElogoThe governor of the Bank of England, Mark Carney, has again expressed concerns about high levels of lending to landlords telling the FT “There are a number of things happening … we are watching it closely and we will take action,” Mr Carney said the problem was that investors might sell their properties at the same time if house prices fell.

The committee, which is led by Mr Carney, said the growing market posed a threat to the UK’s financial stability. “The stock of buy-to-let lending might be disproportionately vulnerable to very large falls in house prices,” the FPC said.

Since the FPC’s warning, Chancellor George Osborne announced a steep stamp duty rate rise for anyone buying a home that is not their main residence, which would include buy-to-let investors as well as second-home buyers, there may be a rush by some would-be landlords to buy properties before then, which might help to push up house prices even further.

Lending to landlords has risen by more than 40% since 2008, while mortgages to owner-occupiers were up by just 2% over the same period.

Buy-to-let mortgages make about up about 10% of the total stock of all outstanding mortgages, and each year, more than a million individual landlords declare rental income to HM Revenue & Customs in their tax returns.


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