LONDON (Reuters) - The Bank of England will receive the power early next year to regulate mortgages used by small landlords to purchase rental property, Britain's finance ministry said on Wednesday.
"The Bank of England's Financial Policy Committee (FPC) will be granted new powers by the government to help it protect the financial system from future risks in the buy-to-let mortgage market," the government said.
The BoE will be able to limit loan-to-value ratios on buy-to-let mortgages, as well as the minimum amount by which the expected rental income from a property must exceed mortgage interest payments.
The BoE had previously asked for these powers in 2014 - which are similar to ones it already has for residential mortgages - and the government held a public consultation about this in early 2016.
Buy-to-let properties have been a profitable investment over the past 20 years, but more recently they have become subject to less favourable tax rules and greater regulation, partly due to public concern they can crowd out first-time home-buyers.