Despite the Bank of England introducing new income caps on borrowing, industry experts are predicting that the B of E is unlikely to introduce mortgage restrictions on lending to BTL (Buy To Let) investors/landlords.

The latest lending rules means that people applying for mortgages or remortgaging properties will be capped at 4.5 times their incomes.

A leading lender's head of its Regulation Authority has issued a warning that if property prices do go sky high, then the Bank of England will certainly consider regulating caps on the buy to let market.

Andrew Bailey  head of the lender's Regulation Authority said: "We are looking across the whole market for signs of stress. You can be assured we will be monitoring buy to let as well,”

His comment reflects the market stress test that bank and building societies balance sheets are subjected to and he confirmed that besides residential lenders it also includes buy to let lenders.

The market stress test involves a lender's balance sheets showing that it is strong enough to cope with home prices reducing in value by up to 35% and that the bank will not implode, it also has to be robust enough if the Bank of England decides increase interest rates up to 4%.

Bailey explains that: “The income multiple cap is not a suitable tool for controlling buy to let loans,

“The nature of the loan requires a relationship between rental income and mortgage loan-to-value which works on a completely different basis to a normal home loan.”

Each Buy to Let borrower undergoes a rent stress test and has to pass the standard that the monthly rent is at least 125% of the mortgage interest being charged at 5% on the property loan.

If this requirement is not achieved then the loans are reduced to meet the 125% cap irrespective of the property's worth.

Bailey says: “The income dynamic is not the same for landlords,

“The way rent moves and affects mortgage repayments is not like working out loan affordability for a home buyer.”