The Council of Mortgage Lenders has published a statement of best practice for non-regulated buy-to-let business to ensure that lending is both “responsible and clearly understood”.
The trade body says 31 of its members have signed up to the principles, comprising 90 per cent of the market, and any other member operating in buy-to-let will be expected to sign up before the end of the year.
Under the principles, lenders must ensure that:
- Advertising of buy-to-let products and services is clear, fair and not misleading
- They have a written policy setting out the factors they will take into account when assessing a customer’s affordability and they will make a robust assessment of affordability according to these principles
- They have, and operate within, a written policy that sets out the handling of buy-to-let arrears and repossessions
- They have a written policy for how they will try to prevent, identify and resolve fraudulent cases
- They have a documented complaints policy that they adhere to.
From next April, buy-to-let lending that involves letting to a family member or a ‘consumer’ (inexperienced) landlord will be regulated by the FCA. Loans for business purposes will not be regulated and it is these loans for which the principles outlined by the trade body are intended.
CML director general Paul Smee (pictured) says: “Lenders know how important it is to have a transparent mortgage market, in which borrowers can have confidence and where lending policy is both responsible and clearly understood.
“The statement of practice reflects what responsible lenders already do and offers a clear explan-ation of how buy-to-let lenders operate. We hope it will make a valuable contribution to under-standing the buy-to-let lending environment.”
Nationwide head of policy for mortgages and savings Andrew Baddeley-Chappell says: “As the private rented sector continues to expand, it is important that the market focuses on adhering to a set of key principles.”