No action on buy-to-let market at this stage, according to Bank governor
Week in Westminster
Published: 17 July 2015 | Author: Michelle Vosper
While developments in the buy-to-let market is an area of active interest for the Financial Policy Committee (FPC), there should be no presumption that the committee will take action at this stage, according to Bank of England governor Mark Carney. Speaking to the Treasury committee in a double session this week covering the Bank’s inflation report and stability report, Mr Carney was asked about the differential treatment of buy-to-let lending and residential mortgage lending. The governor pointed out that buy-to-let mortgages are different in the sense that they are commercial transactions and have different characteristics. He confirmed that this is one of the issues that the FPC is analysing, but would not be drawn on prejudging the conclusions of that analysis.
The subject of buy-to-let mortgages and whether they should be regulated in the same way as residential mortgages or pose a risk to financial stability was also raised by Conservative MP James Cartlidge in written questions. In answer, economic secretary Harriet Baldwin referred to the FPC’s monitoring of the sector and the forthcoming Treasury consultation on this subject.
The Treasury issued a press release following the Housing Finance Forum meeting. The Forum meets twice a year and includes government ministers from various departments, lending industry, and consumer groups. Commenting on the meeting, the economic secretary thanked the mortgage industry for its support over the last parliament in securing economic recovery, and highlighted the importance of the industry in serving people at all stages of life from first-time buyers to supporting lending to older people.
The Welfare Reform and Work Bill has been published and will have its second reading debate in the Commons on 21 July. The Bill includes provisions to introduce loans for mortgage interest which will replace support for mortgage interest as announced in the summer Budget. It also includes provisions in respect of the reduction in social housing rents.
The Financial Bill 2015-16 to legislate for the new tax changes announced in the Budget was also introduced to Parliament and will be read a second time on 21 July.
Housing issues were discussed in a number of debates. The first was in the context of the Budget announcements during which communities secretary Greg Clarke, shadow communities secretary Emma Reynolds and the SNP’s Alison Thewliss debated the government’s proposals.
The second debate, introduced by Conservative MP Iain Stewart, was on the subject of shared ownership housing and how this could be expanded and improved. Mr Stewart highlighted various issues with the current model – lack of general information and understanding, difficulties in respect of maintenance costs, eligibility criteria, and complications and the expense of staircasing. However, the MP’s principle suggestion was to call on government to “explore ways in which developers and financial institutions could work together to develop investment vehicles so that the capital from pension funds could be used to part-fund the development of shared ownership properties on new housing estates.” Shadow housing minister Roberta Blackman-Woods suggested mortgage availability is too limited, and that government should review capital weightings for this type of lending. Responding to the debate, housing minister Brandon Lewis acknowledged shared ownership is popular and effective, and an integral part of the affordable homes programme. He agreed that “we need to look for more ways to help identify and lift the…barriers to extending shared ownership.”
MPs also debated the issue of housing supply in London this week. Labour MP Rupa Huq introduced the debate raising concerns about the rise of “generation rent”, the number of people living in shared housing or with parents into their 30s, the ability of councils to build houses and the “disastrous new right-to-buy policy”. Speakers during the debate included Labour MPs and London mayoral candidates David Lammy and Sadiq Khan (although notably not the current Mayor Boris Johnson), Labour MP and party leadership contender Jeremy Corbyn.
A tweet by the Communities and Local Government select committee gives an insight to its immediate priorities - “CLG Committee is appointed and agrees to early inquiries into Devolution Bill, Right to Buy and LOBOs”. The latter refers to local councils and lender option, borrower option loans.
The DCLG published the full version of the English housing survey 2013-2014. The survey’s top line results were published earlier in the year. This annual report covers trends in housing tenure, including themes such as housing need, housing moves, and vulnerable and disadvantaged groups.
The Commons work and pensions committee has launched an inquiry into the guidance and advice on offer to people navigating the "choice and flexibility" changes to pensions introduced in April of this year. The committee has invited written evidence on the take-up, affordability and independence of advice, and recommendations for improvement.
Social Market Foundation has published a report looking at competition in the banking sector. Playing the field: consumers and competition in banking looks at the demand side of the retail banking market, and how consumer behaviour is strengthening competition.
And finally, Tim Farron was elected the new Liberal Democrat leader, beating Norman Lamb with 56.5% of the vote.