Buy-to-let left out of regulation loop

The Treasury has ruled out regulation of the buy-to-let mortgage market.

It is sticking to the view that buy-to-let mortgages constitute a commercial transaction – despite calls from consumer bodies, lenders and intermediaries that the sector should be regulated.

The Treasury says it “believes that the definition of a mortgage is the right one and that there should be no changes”.

But Kevin Paterson, director of Park Row Independent Mortgages, says: “Buy-to-let should come under the scope of regulation with the exception of professional landlords – who I would class as landlords with at least six properties. Anything less than that should be classed as residential and regulated as such. It&#39s ludicrous that it remains outside.

“The small-scale, amateur landlord with one to three properties who doesn&#39t do it properly and maximises their existing mortgage to fund their investment while trying to do everything on a shoestring will find it is fraught with danger.”

But Tim Sturley, head of business development at Mortgage Express, disagrees. He says: “It&#39s what we always expected. Buy-to-let is a commercial transaction. The major issue with trying to bring buy-to-let within the scope of regulation would always be over definitions. How would you define it? Would a pub or a shop count as commercial or residential?

“Most responsible lenders treat buy-to-let mortgages as if they were under the Mortgage Code anyway.”

Mortgage Strategy exclusively revealed last week that the National Association of Commercial Finance Brokers has published a Code of Conduct for its members.

Keith Heron, NACFB chief executive, says: “We&#39re delighted that the Treasury has taken this stance. The NACFB Code of Practice will go a long way in helping this sector regulate itself. Self-regulation for buy-to-let is the way forward. Intermediaries can visit for full details.”