Speaking to The Telegraph yesterday, Bailey said price falls would harm retirees and instead the association wants to promote sustainable asset markets.
PRA chief executive Andrew Bailey has targetted ending the boom-bust buy-to-let cycle to protect retirees investing in property.
Speaking to The Telegraph yesterday, Bailey said price falls would harm retirees and instead the association wants to promote sustainable asset markets.
Yesterday the Prudential Regulation Authority recommended for buy-to-let lenders to stress test loans for five years with a rise of at least 2% or against a rate of 5.5%.
The market will already have to cope with a 3% stamp duty surcharge from 1 April and the amount of mortgage tax relief landlords will be able to claim back will be cut back from 45% to 20% between 2017 and 2020.
Bailey said: “We have nothing against people wanting to hold their asset portfolio in the form of buy-to-let, but we want sustainable asset markets.
“I don’t think it benefits anybody, including people who own buy-to-let properties, to have an unsustainable boom-bust cycle in the UK property market.
“I’ve been in the Bank for 30 years and I’ve seen two of them happen, and I’m very keen not to see a third one.”
He added: “People might form expectations about what the necessary long-term saving to support their retirement will be, which can then [if house prices fall] be transformed quite suddenly in ways that frankly are unwelcome.”
Of loans used to buy houses last year buy-to-let mortgages made up 17%.
