Buy-to-let lending clampdown

David Smith, partner and head of operations at Anthony Gold Solicitors, examines and assesses the possible impact on the buy-to-let market if the Financial Conduct Authority (FCA) decides to intervene in regulating smaller and non-bank lenders.

Why is the FCA considering intervening in the buy-to-let market?

The Bank of England has already expressed concern that the buy-to-let market is as buoyant as it was prior to the 2008 crash and that lending is at a similar level as it was then. It has suggested it might, through the Prudential Regulation Authority (PRA) apply some degree of regulation to bank lending and has consulted on whether it should do so. However, the lending market has diversified in the meantime, partly as a response to the crash as well, and some smaller and non-bank lenders fall outside the remit of the PRA and within that of the FCA. The FCA is considering whether a similar element of regulation should now be applied to these other lenders.

What does this mean for one of the fastest-growing areas of the housing market?

It could have no effect at all. Although the PRA has suggested that it will regulate buy-to-let lending, this will only be to ensure that an appropriate set of risk criteria is used when assessing borrowers and that there are no lax standards being applied in this sector. In other words, the PRA will want to be sure that