Media Centre
Press release
Buy to Let Regulation would fail, say the Building Societies Association
|
Date:
15 Feb 2010
|
Print page | Email |
Plans to regulate buy to let mortgages could see the Government’s objectives to increase investment in the UK private rental sector fail.
The BSA said in its response to the Treasury’s consultation that extending regulation to buy to let mortgages would fail to address the underlying issues in the buy to let sector and, could result in even more lenders’ withdrawing from the market as new proposals fail to reflect the investment decisions that buy to let borrowers make.
Commenting on Government proposals to regulate buy to let mortgages, Paul Broadhead, Head of Mortgage Policy at the BSA said:-
“The decision to enter into the buy to let market is an investment decision made by the borrower. Including buy to let mortgages in the same regime as owner occupied mortgages would not be practical. Subjecting buy to let investors to affordability and suitability assessments in the same way as owner occupiers is not appropriate, and would result in a further constraint in the supply of quality housing to the private rental sector.
“Only regulating part of the market makes no sense at all and would only serve to confuse the market and to provide a loophole that less reputable organisations could take advantage of.”
The Government also proposes to explore extending FSA regulation to second charge lending and looks at how borrowers can be protected when mortgages are sold on.
Mr. Broadhead said:-
“We support the principle of the regulation of second charge mortgages being transferred to the FSA. This will importantly make a single regulator responsible for both first and second charge mortgages. That said there will be practical difficulties particularly with regards to the transitional arrangements therefore it is important these are constructed to protect existing borrowers and lenders, as responsibility is transferred from the OFT to the FSA.
“We also agree that firms buy mortgage books should be regulated. It is unfair that consumers who find their mortgage is sold on by their lender are exempted from the benefits of regulatory protection that other customers receive.”
~ Ends ~
The BSA’s response to the Consultation can be found at http://www.bsa.org.uk/policy/response/Mortgage_Regulation_A_Consutation.htm
The Treasury’s consultation paper Mortgage Regulation – A Consultation can be found at http://www.hm-treasury.gov.uk/d/consult_mortgage_regulation.pdf
The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 52 UK building societies. Mutual lenders and deposit takers have total assets of over £390 billion and, together with their subsidiaries, hold residential mortgages of almost £260 billion, 21% of the total outstanding in the UK. They hold over £250 billion of retail deposits, accounting for just under 23% of all such deposits in the UK. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches. Building societies alone account for about 32% of all cash ISA balances.
Photographs of Paul Broadhead are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk
