The Council of Mortgage Lenders is to publish a statement of practice for buy-to-let in the coming weeks following the Treasury’s consultation on the EU mortgage directive.
In its latest news and views publication, published last week, the CML again expressed its disappointment at the Government’s U-turn on the buy-to-let sector’s inclusion in the directive. It was previously expected that no area of buy-to-let would be regulated.
Accidental landlords – those who have not actively purchased a property with a view to letting it – will fall under the scope of the directive as the Government feels it would be non-complicit to exclude such borrowers despite significant lobbying efforts to exclude the sector.
The CML has been composing a statement of practice since before the Government U-turn but it will now also include guidance on this matter. Other areas it will address include:
- The responsibilities of lenders, with a commitment to lend responsibly and treat customers fairly.
- An undertaking to provide information that is fair, clear and not misleading and in a form broadly consistent with the existing “key facts illustration” and the proposed European standardised information sheet.
- The need to make a robust assessment of mortgage affordability, allowing for conditions in the rental market, the impact of future rate rises, rental voids and arrears, and other costs.
- The responsibilities of buy-to-let landlords, underlining their obligations to be competent and capable and to accept that their borrowing is a commercial decision.
The trade body adds that due to the small proportion of borrowers brought under the regulatory scope of the directive, it is more worried about policing the new rules than the volume of people affected.
It says: “For lenders, regulation that affects some landlords but not others is potentially problematic.
“It is therefore the potential complexity of the proposals – rather than the number of borrowers affected – that causes most concern.”