In a move that many have been calling for and predicting for a very long time now, the Government has announced that the buy to let sector will now be regulated to protect the borrower.
This follows a comprehensive investigation by the government into the causes of the latest financial crisis, and means that people entering into a BTL agreement can now do so with some sense of security.
Exchequer Secretary, Sarah McCarthy-Fry, says “We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market.” And most of us can only say “about time!”
Apparently, the sticking point regarding the regulation of the BTL industry involved the fact that expenditure in this area was regarded as investment finance. Many have rightly pointed out though that given the huge number of amateur landlords involved in BTL this is a bit of a misnomer.
The bad news about this regulation is that some mortgage lenders have issued a thinly veiled threat about how it will affect the number of BLT loans available. Anyone involved in this area knows that it is very hard to secure this kind of mortgage at the moment and it seems that mortgage lenders are saying that this regulation will make it even harder.
I am not sure why this should follow. If the regulations are designed to protect the consumer then surely only those loans that were abusing the rights of the consumer will disappear. The mortgage industry must agree that those should never have existed in the first place?
