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‘Market should prepare for full regulation of B2L’

The market should prepare for full regulation of the buy-to-let market, according to industry experts.

Speaking at the Financial Services Expo today about the Government’s shock move to regulate “accidental landlords” to comply with the EU mortgage credit directive, commentators suggested full regulation is on the horizon.

Precise Mortgages managing director Alan Cleary says the whole buy-to-let sector should be regulated to protect consumers.

He said: “I would regulate the crap out of buy-to-let. I’ve got the same view I had in 2004 – that’s not so much about lenders or brokers misbehaving but for consumer protection. The buy-to-let market [already] acts like a regulated market; all the lenders treat it as regulated so the market’s sort of regulated already, but for me, it’s about [ensuring] consumer protection.”

Mortgages for Business managing director David Whittaker said: “Now while buy-to-let currently represents 12-13 per cent of gross lending, that probably seems a logical explanation but if buy-to-let grows to the volumes some are predicting in the years ahead becoming 25-30 per cent of the market, then you couldn’t have 70 per cent of the market regulated and 25-30 per cent of it, not.

“So it’s inevitably going to happen at some point. I just hope that we all behave ourselves sufficiently well not to give the regulator the reason or the excuse to hasten the day of regulation.”

Earlier this month the Government published a consultation on the EU mortgage credit directive, which proposes that “accidental landlords” – borrowers who have not actively decided to buy a property to rent it out and are not acting in a business capacity – must be regulated.

Examples of cases that would come under the proposed regulation include where a property has been inherited, or previously lived in by a borrower unable to sell it who instead decides to let the property.

Originally, the directive would have captured buy-to-let mortgages but the UK mortgage industry successfully argued that these mortgages should not be regulated in the same way as residential mortgages. But now the Government has U-turned on excluding the buy-to-let market from regulation, saying it needs to regulate the “accidental landlord” market in order to comply with the directive.



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  • Martin Tapper 26th September 2014 at 9:08 am

    Regulating the business landlord is a ridiculous concept. A business takes a commercial view on a commercial decision. An investment property should not be treated in the same way as a residential purchase.
    It would be prudent to make sure that first time investors were properly advised, but thereafter the investor should be deemed to know the ropes. If the issue is fraudulent applications, such as interest only mortgages by the back-door, this could be solved again by regulating the first time landlord.
    In a regulated market the additional compliance imposed on multiple portfolio sales would be insane!
    Well, another view would be that there is an excellent opportunity for us brokers who would then have to charge higher fees in order to cope with the work.

  • Peter Turner 25th September 2014 at 8:35 am

    I accept the point about “accidental” landlords.

    However, if you buy something with the express purpose of renting it out, you are not a consumer, you are a business. That applies whatever the commodity is – car, computer, boat or house.

    And if you are not a consumer then consumer protection should not apply to you.

  • Chris Hulme 24th September 2014 at 3:11 pm

    Isn’t it regulated in all but name already?

  • Derek Frost 24th September 2014 at 2:50 pm

    Alan Cleary has it right……it should always have been so!