MMR: Buy-to-let regulation needs more thought

Commenting on the FSA’s MMR, Bux said, “I really do not feel that buy-to-let needs to be regulated. These types of mortgages are based on an investment transaction. Borrowers take out these mortgages for either capital gain or yield. I agree that more needs to be done to protect the tenants when buy-to-let properties have been repossessed, but even then this already exists if consent to let the property has been taken from the lender.

”Already guidelines are in place for repossessing properties. The FSA should turn their attention to the copious amounts of unsecured debt borrowers can take out in a matter of minutes online. Nothing prevents a borrower from taking out another five credit cards. From my experience the main reason why properties are repossessed is that there is just too much unsecured debt in the background. Borrowers cannot keep up with the repayments and therefore start missing payments. Lenders should not be blamed for this.

”Buy-to-let mortgages are purely a commercial decision. Many of our borrowers buy these properties to refurbish and then ultimately sell on for a profit. This profit is calculated into their business model. They know what price they should pay for the property, what would be the cost of refurbishment and the time taken to market it for a sale. Therefore to say these mortgages fall into the same realm as an owner occupied mortgage would be incorrect.

”Mayfair Bridging is not against regulation but the FSA needs to think more deeply about putting buy-to-let mortgages in to the same boat as owner occupied mortgages. The reasons for why a borrower takes out a mortgage to buy a house to live in are completely different to that of a property trader. There is a clear distinction.

”I fear that the market may get over-regulated which would make very difficult to get any sort of finance. Self certification mortgages need to be reviewed but a blanket ban will hamper the self employed from getting a loan.”