Proposals on changing the form of the buy-to-let market are to be explored, according to the Treasury.
It’s report entitled Mortgage Regulation: Summary of Responses states that the government will examine how to ensure the effect of regulation on the buy-to-let market is proportionate, particularly with regard to individual professional landlords.
Further consultation on any changes will follow after the conclusion of the current Treasury consultation exercise on investment in the private rented sector which closes on April 28.
Under current proposals the whole of the buy-to-let market is due to be regulated by the Financial Services Authority but the Treasury is believed to be reconsidering which parts of the market need to be regulated.
It says many lenders and property professionals have expressed concern that the form of regulation proposed could impose an unnecessary burden on the operation of the private rented sector.
They and a number of consumer groups also argued that the proposed regulations needed refinement to better protect consumers from harmful practices.
In its report the Treasury says: “The government does not agree with those respondents who argued that these considerations mean the buy-to-let sector should remain unregulated.
“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 failure and 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 the government has held off implementing regulation in its current form and is looking for further input before any plans are drawn up.
“In 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 through carefully so any new regulations would not strangle an already fragile market.”
He adds that the NACFB is also pleased the Treasury seems to have acknowledged that the buy-to-let market is complicated and many of the problems seen in it have been down to issues with the investments vehicles involved – the properties – rather than the mortgages used to buy them.
Tyler adds: “Obviously, there is still work to do on this subject but at least at this early stage it is clear the government has listened to our representations. We will continue to work to ensure the broker’s voice is heard.”