Treasury to reconsider BTL regulation

29 March 2010 | By Natalie Thomas

It’s report - Mortgage Regulation: Summary of Responses, says the government will examine how to ensure the impact of regulation on the buy-to-let market is proportionate, particularly for individual professional landlords.

Further consultation on such changes will follow after the conclusion of the current Treasury consultation on investment in the private rented sector, which closes on April 28.

Under its current proposals the whole of the BTL market was due to be regulated by the Financial Services Authority, but the Treasury is now believed to be reconsidering what parts of the market need to be regulated.

It says many lenders and property professionals expressed concerns that the form of regulation proposed could impose unnecessary burdens on the operation of the private rented sector.

They and a number of consumer groups also argued that the proposed regulation may need further refinement to protect consumers fully from recent harmful practices.

But in its report, the Treasury says: “The government does not agree with those respondents who argued that these considerations mean that the buy-to-let sector should remain unregulated.

“Obviously, there is still work to do – but at least in these initial stages the government has listened to our representations and we will continue to work to make sure the broker’s voice is heard.”

Adam Tyler, chief executive of the National Association of Commercial Finance Brokers

“A large number of respondents agreed with the government that there is overwhelming evidence that the operation of some of the buy-to-let market has suffered from significant market failure and that this demands government intervention.

“The government remains committed to action to address these failures.”

But it adds: “However, to address respondents’ concerns and in view of the importance of the private rented sector, the government has decided to explore changes to the form of regulation proposed.”

Adam Tyler, chief executive of the National Association of Commercial Finance Brokers, says: “I am glad that they have held off implementing regulation and are looking for further input before any plans and drawn up.

“During our representation we outlined the difficulties inherent in a ‘one size fits all’ regulatory package based on the residential market and explained that definitions would need to be thought out carefully so that regulation wouldn’t strangle an already fragile market.”

He says it is also pleased that the Treasury seems to have acknowledged that the buy-to-let market is more complex – and that many of the problems experienced have been down to problems with the investments vehicle – the property purchased – rather than the mortgage used to buy it with.

Tyler adds: “Obviously, there is still work to do – but at least in these initial stages the government has listened to our representations and we will continue to work to make sure the broker’s voice is heard.”