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Detail of outcome
This document summarises the responses received and the government’s position in light of those responses. The government believes that there is a strong case for granting the Financial Policy Committee (FPC) powers of direction relating to buy-to-let mortgages. The government also believes that loan-to-value (LTV) ratio limits and Interest Coverage Ratio (ICR) limits are the most effective tools for the FPC to address financial stability risks posed by buy-to-let lending. This document should be read in conjunction with the final stage impact assessment of granting the FPC the requested powers of direction
In his 2014 Mansion House speech, the Chancellor of the Exchequer committed to ensuring that the Financial Policy Committee (FPC) has “all the weapons it needs to guard against risks in the housing market”. On 2 October 2014, the FPC published recommendations to the government.
Specifically, the FPC recommended that it be granted powers of direction relating to tools in the buy-to-let residential mortgage market by reference to:
- loan-to-value (LTV) ratios
- interest coverage ratios (ICRs)
This consultation aims to gather views on how the operation of the UK buy-to-let mortgage market may carry risks to financial stability; and also seeks responses on the specific tools by reference to which the FPC has recommended it be granted powers of direction, including in their impact on business activity and economic growth.
Read the news story.
The government would welcome responses from individuals, institutions and associated bodies that would be affected by the FPC’s powers of direction (ie PRA- and FCA-authorised firms) and all parties interested in housing market policies.