The curbing tax relief on interest-only buy-to-let mortgages for landlords by Chancellor George Osborne is unlikely to have a major impact on activity in the sector, according to Stefano Silvestrin, the Nationwide Building Society’s senior economist.

Speaking at the Financial Services Expo (FSE) London on Wednesday (16 September), Silvestrin said the decision to cut the tax relief higher-rate taxpayers could claim down to a basic rate level over the next four years might however have a ‘dampening’ impact.

He said: “Activity [in the buy-to-let market] will not be as high as it would have been if this measure had not been introduced. But we don’t think it will have a major impact.”

Silvestrin thought it was likely that the buy-to-let market would continue along its current path with “modest growth” but was also quick to highlight that the “risk perception” around buy-to-let has dropped for lenders, which is why there is more activity and competition.

Further regulation of the sector was however looking likely. Silvestrin said that the financial regulators could act further in the buy-to-let space if they believe that lending levels were getting too high and the sector was securing too great a proportion of total lending.

He added: “If they [the regulators] do anything, it will be around increasing the rental cover ratio required and increasing stress test levels on buy-to-loans. [Buy-to-let] is likely to become more regulated.”