PICs don’t warrant BTL regulation, says CML

The CML outlined radical differences between buy-to-let and PIC-style investors and cautioned that regulation of the sector would not protect consumers from problems specific to PICs, for example, the transparency of new-build property prices.

It believes the focus should be on regulating advice and inducements offered by PICs as it says the FSA’s current system is unsuitable when dealing with inappropriate speculative property investment.

The trade body is confident lenders are alert to PIC activity and vigorously discourage short-term speculative investment but supports further enquiries by authorities into bringing PICs within the control of the FSA.

Andrew Heywood, senior policy advisor at the CML, said the concentration of buy-to-let lending that could be going to PIC-induced investors is tiny but care should be taken.

He said: “Buy-to-let lenders have taken a lead in ensuring that speculators and their advisers don’t benefit at the expense of bona fide investors. It’s now important other stakeholders in the residential property market are seen to maintain similar vigilance.”

Lynsey Scrivener, head of marketing at The Money Centre, agreed buy-to-let should remain unregulated but tighter controls were crucial. She said: “Stricter guidelines are needed for those that cheat people out of their money with adverts depicting sunlit beaches without mentioning the risks.

“We tell customers if they’re willing to risk their property this is what they could get but that it should be considered a long-term investment.”

She added: “Improved guidelines are needed. For example, on our advertising we have to state that your home may be repossessed if you don’t keep up repayments but with buy-to-let that wording is not true.”