The Daily Mail has reported this week that the Chancellor George Osborne is looking at ways to cut down the freedom of new buy-to-let mortgages

He is working with Ministers to formulate a plan as to whether they issue The Bank of England with powers to restrict the exploding buy-to-let market. The boom is being blamed for a potentially damaging housing bubble.

Osborne has already been in contact with the Bank of England’s governor, Mark Carney, to arrange a meeting very quickly for a ‘consultation’.

Prospective homeowner’s have to go a through a far more stringent process to attain a mortgage than landlords when applying for a buy-to-let loan. Apparently landlords are far more likely to be awarded interest only mortgages than those on the housing ladder.

There are rumours that the chancellor could award the Bank of England with far reaching powers over potential buy-to-let mortgages restricting the numbers that are allowed. It could also decide whether landlords can have a new loan and how much is awarded due to their size of deposit and in relation to their earnings.

In the last six years numbers of landlords have increased from 1.5 million to 2 million and buy-to-let mortgages account for a fifth of the overall market.

The Bank has already issued concerns over the size of the BTL market as it feels that when interest rates increase, many landlords could be forced into selling their properties. This would see a major influx of houses appearing on the market that would drastically lower prices.

When Osborne announced his thoughts he was questioned by the Treasury select committee when he envisaged the Bank would be handed the new controls, the chancellor said:“I think the next couple of months. I have just written a letter to [the Bank’s governor Mark Carney]. It’s all imminent. It’s happening this year.”

He also told the committee the Bank was supposed to ‘identify bubbles and risks in the financial system’, and it blaming the buy-to-let sector as one of the reasons that could cause it.

Osborne commented that he did not want to stop smaller first time landlords entering into the market: “There are many people who have saved hard throughout their lives to buy a little property and rent it out. Those are people we absolutely want to support and help. But I think there are concerns we have to address.”