The Mortgage Finance Blog

Last week, online broker magazine mortgage strategy has published the results of research that shows 54% of mortgage brokers would favour regulation of buy-to-let by the Financial Services Authority. The article goes on to quote Alan Cleary of Exact mortgage experts as saying " The lack of regulation meant it was too easy for amateurs without a commercial head on their shoulders to jump on the bandwagon…" Although nm finance would welcome a single regulatory scheme for all mortgages (and secured loans, although that’s another issue altogether), it is difficult to see how regulation would have prevented amateur landlords from entering the market.

Regulation of the buy-to-let sector would probably increase the clarity of the mortgage products and would enforce a more thorough fact-finding and recommendation process on brokers. However good buy-to-let brokers are already doing these things. What is difficult to understand is how regulation would stop someone from buying a property that had an acceptable value and rental income both determined by a fully qualified surveyor?

The current problems being seen in the buy to let market are related to oversupply, specifically of new build flats. This oversupply has resulted in declining rents and dwindling property values which is causing landlords financial problems. The reason that amateur landlords are hit particularly hard is because they don’t have a large and varied portfolio to spread risk and regulation would not have helped.