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Following proposals published in the Mortgage Market Review by the Financial Services Authority (FSA), landlords may, in the future, receive protection in the buy-to-let lending market.
The FSA, which currently regulates the residential mortgage market, has recognised that buy-to-let landlords with smaller portfolios (one-two properties) would benefit from greater assurances from the FSA.
The FSA has estimated that 35 per cent of all buy-to-let landlords hold property portfolios of just one property, and an additional 28 per cent have portfolios of between two and five properties. However, the FSA has expressed concerns that such private investors or small business borrowers are not in a strong position to protect their own interests. The FSA has further recognised that if smaller investors and businesses are to be protected, a key consideration will be defining the characteristics of such investors to ensure that regulation is not applied more widely than necessary.
The proposals from the FSA would mean that currently unregulated buy-to-let lenders would have to comply with standards similar to those which banks and building societies have to adhere to when lending to residential buyers. Principally, these include the following points.
- Providing clearer information regarding the cost of the loan.
- Providing greater protection from repossession.
- Applying new rules on affordability criteria.
The full Mortgage Market Review Discussion Paper can be found at: www.fsa.gov.uk/pubs/discussion/dp09_03.pdf
The FSA has invited comments to be made about its Mortgage Market Review Discussion Paper. Comments must be received by 30 January 2010.
Comments may be submitted electronically: www.fsa.gov.uk/pages/Library/Policy/DP/2009/dp09_03_response.shtml
Alternatively, comments may be sent in writing to:
Lynda Blackwell
Conduct Policy Division
Financial Services Authority
25 The North Colonnade Canary Wharf London E14 5HS
Telephone: 020 7066 0168
Fax: 020 7066 0169
E-mail: dp09_03@fsa.gov.uk
Related articles:
Attracting and keeping tenants
Legal tips for landlords
Dealing with problem tenants
General landlord information (DIY, Inventories and more..)
Energy-saving tips for landlords and tenants
Financial tips for landlords
Buying a buy-to-let property (auctions, location etc)
Insurance for landlords
Using letting agents
Mortgage information for landlords
The information contained within this article is for general information purposes only, it does not constitute advice. Direct Line for Business endeavours to keep the information up to date and correct but does not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Direct Line for Business will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
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