After years of regulation in the residential property market within the UK and EU, trade bodies are now said to be discussing how to pursue regulation
on buy to let mortgages within the UK and the EU. After initial fears that the FCA had given up on keeping all buy to let unregulated, this new evidence is likely to see increased regulation within the buy to let mortgage market in a move likely to affect the mortgage broker.
It has emerged that sources close to the Treasury have claimed that mortgage trade body officials, mortgage brokers and mortgage lenders have been told that regulation of buy to let lending not seen before within the industry was now a ‘done deal.’ The move towards buy to let regulation seemingly looks set to occur after consistent lobbying by the Council of Mortgage Lenders and the Association of Mortgage Intermediaries contacting Europe to prevent this from happening.
Although any proposed directives are yet to go through to the European Parliament in Brussels, it has been claimed that trade bodies are ready to push through the case for buy to let regulation until it occurs.
The Council of Mortgage Lenders have claimed; “Buy-to-let lending is so different to residential lending and the CML has always believed it should not be regulated in the same way. However, the UK could find buy-to-let inadvertently captured by the European Directive so it is sensible for Treasury and the trade bodies to come up with a proposal to try to mitigate this threat.”
Furthermore, it is looking increasingly likely that there will be increased bridging finance seen within the UK and the EU. Bridging finance and other short term loans may seem easier products for mortgage lenders to sell and for prospective mortgagees to obtain. These products are likely to be unregulated or at least less regulated compared to other mortgage products and could have a negative effect within the wider mortgage market.
However, the buy to let sector should not be afraid of regulation in the current market. More suitable and affordable products may come on to the market in the buy to let mortgage market, benefiting consumers and mortgage brokers alike.