The Bank of England (BoE) has announced new rules for banks underwriting buy-to-let mortgage contracts, in a bid to curb the market.
In a statement released today, the Prudential Regulation Authority (PRA), who is responsible for the regulation and supervision of banks, said lenders will need to meet a set of minimum requirements before underwriting buy-to-let mortgage contracts .
The PRA also said lenders will need to consider borrowers’ non-rental incomes to determine how they would cover property costs and cope with future interest rate rises under strict affordability tests.
Portfolio landlords, those who have four or more mortgaged buy-to-let properties, will also face extra scrutiny under the new rules .
The BoE’s new buy-to-let rules came as the Bank also announced it was introducing new safety buffers for banks, designed to be varied with the economic cycle to stem lending in booms and ease pressure on banks in busts .
The Financial Policy Committee (FPC) said in a statement: “Risks stemming from domestic credit have risen”, adding that it remained “alert to potential threats to financial stability” .
The Bank also said that the outlook for financial stability had worsened since its last quarterly report in November: “The outlook for financial stability in the United Kingdom has deteriorated,” the FPC said. “Domestic risks have been supplemented by risks around the EU referendum,” it added .
BoE policymakers from Governor Mark Carney, to Director of Financial Stability Strategy Alex Brazier, have said the “job’s almost done” in building capital levels, with banks within a “hair’s breadth” of the right amount .
Click here to read the full statement.
 City AM. ‘Bank of England clamps down on buy-to-let market with strict new rules for mortgage underwriters’. cityam.com
 Financial Times. ‘Bank of England tightens rules for amateur landlords’. ft.com
 Reuters UK. ‘Bank of England warns on Brexit risks, tightens buy-to-let lending rules’. uk.reuters.com