Consultation outcome

Consultation on Financial Policy Committee powers of direction in the buy-to-let market

• From: HM Treasury
• Published: 17 December 2015
• Last updated: 16 November 2016 — See all updates

This was published under the 2015 to 2016 Cameron Conservative government

This consultation has concluded

Read the full outcome

Financial Policy Committee powers of direction in the buy-to-let market: response to consultation

PDF, 361 KB, 33 pages

The Bank of England Act 1998 (Macro-prudential Measures) Order 2016

PDF, 425 KB, 5 pages

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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

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Original consultation

Summary

Seeking views on how the operation of the UK buy-to-let mortgage market may carry risks to financial stability and the tools and powers granted to the FPC.

This consultation ran from
midday on 17 December 2015 to midday on 11 March 2016

Consultation description

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.

Documents

Financial Policy Committee powers of direction in the buy-to-let market

HTML

Draft Statutory Instrument for Bank of England Act 1998

PDF, 118 KB, 4 pages

Impact assessment

PDF, 990 KB, 34 pages

Published 17 December 2015
Last updated 16 November 2016 + show all updates

1. 16 November 2016

   Updated with consultation response

2. 17 December 2015

   First published.