54% of Mortgage Brokers Want FSA to Regulate Buy to Let.
Posted on July 16th 2009
54% of mortgage brokers believe buy to let should be regulated by the FSA, according to new research from Exact mortgage experts. The research showed that 2 out of every 5 brokers said at least 90% of their BTL clients were amateur landlords. 63% of brokers surveyed said more than 75% of their BTL clients were amateur investors. Exact polled 549 mortgage intermediaries.
Alan Cleary, managing director of Exact mortgage experts, said, “Buy to let should always have been regulated. The ready availability of mortgage finance and credit up until two years ago opened the door for a lot of amateur investors. The lack of regulation meant it was too easy for amateurs without a commercial head on their shoulders to jump on the bandwagon. It was a mistake to assume that because buy to let was viewed as a commercial endeavour, it could be left unregulated. The number of amateurs landlords in the private rented sector with sizeable portfolios now well under water is proof of the fact.”
Buy to let arrears rates are above the market average according to official statistics. Exact has assessed the credit quality of more than £4bn of specialist loans. Its assessments suggest a large proportion of buy to let arrears are caused by relatively few individuals who invested unwisely at the height of the market.
“The lack of regulation has definitely contributed to higher arrears rates in the sector. But, there’s a larger issue than treating buy to let landlords who are in financial difficulty fairly,” says Cleary, “If landlords get behind on their mortgage payments, their tenants can be in danger of being turfed out if the property goes to possession. The lack of regulation in the sector makes it much harder for the government to protect these people. The FSA has said it intends to review regulation of the buy to let sector – I would suggest there’s nothing to be reviewed. Mistakes need to be corrected.”
