The Mortgage Code Compliance Board has called for the 'amateur' buy-to-let market to come under statutory regulation.
With the number of entrants into the private letting market continuing to grow, the MCCB is concerned that many amateur landlords are unaware they have no form of protection.
Though buy-to-let mortgages are considered as investments the MCCB says they share many of the characteristics of residential mortgages.
Spokesman Brad Baker tells Mortgage Strategy: “Amateur landlords haven't got the same business awareness as the professionals. There's a huge difference between the professional landlord and somebody who may have one property as a substitute for a pension. It could be argued they should come under some sort of protection.”
Some brokers agree, warning that brokers' standard PI cover may not cover commercial finance.
Mark Alexander, managing director at buy-to-let specialist The Money Centre, says: “There is a misconception that buy-to-let has some sort of recourse in the event of poor quality advice when in reality there's none either financially or legally.”
But the National Association of Commercial Finance Brokers says the problem is more to do with advice given on the viability of the property.
Keith Heron, chief executive of the NACFB, says: “Anyone who's involved in buy-to-let should be subject to voluntarily regulation through the NACFB code of practic. The broker only provides advice on the finance, not on commercial viability.”