Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he plans to change the law on the income threshold requirement for buy-to-let mortgages by (a) lowering the threshold and (b) removing the requirement for the threshold to be more than the rent from the let property.

The independent Prudential Regulatory Authority (PRA) is responsible for the regulation of the underwriting of buy-to-let mortgages. Under the PRA’s Supervisory Statement of September 2016, firms are required to conduct: an interest coverage ratio test which compares expected rental income to the monthly interest cost of mortgage repayments; and/or an income affordability test. Lenders must also take into account future changes to interest rates over a minimum period of five years. The purpose of this is to prevent lenders taking excessive risk by ensuring that the borrowers have the ability to repay the loan.

Beyond the requirements set out in the regulations, decisions concerning how lenders assess mortgage applications are commercial decisions for banks and building societies. I hope you can appreciate that it would be inappropriate for the Government to intervene in these decisions.