This page contains a Flash digital edition of a book.
MIp34-35_0909.qxd 25/8/09 18:36 Page 3
Commercial Finance Introducer
35
property landlords and endless television But whether enforcing FSA regulation on the calculate affordability. But the investor will be
programmes on the subject, and who now find mortgage they used to purchase their expected to do the research to see that their
themselves with an investment falling in value investment would have helped them at all when chosen investment vehicle - the property itself -
and struggling to find tenants. This is the bottom dropped out of the property is appropriate for the type of tenant they have
undoubtedly bad news for the investor and for market is a moot point. in mind, is of a suitable standard, is in the right
the market. But I would still ask how regulating location, and complies with all the necessary
the mortgage used to buy this property would Novice investors legislation – basically that it is a good
have prevented this from happening? One of the most commonly reported buy-to-let investment. Buy-to-let is much more “hands
problems has been the phenomenon of novice on” that any other kind of investment. The
Commercial investment investors leaping on the band wagon and vehicle for a buy-to-let investment is a property
Buy-to-let is not - as it has often been painted – buying a property off plan to rent out without - not itself a financial product, so the FSA will
either a simple investment decision, or a get realising that 99 other investors have just done be unable to protect consumers here.
rich quick scheme. A loan is to purchase a exactly the same thing, on exactly the same site. So before the FSA pulls its underpants on
property to be rented out is a commercial The result is a glut of property to let, each over its trousers and flies off in search of its
investment, and as such really it is not an competing for tenants, in a property market latest Lex Luthor, we need to be clear about
investment for the average consumer unless where prices are falling. As Christopher Taylor, where the buy-to-let problem lies and what
they have really done their homework. Alan CEO of London and European points out in a would be a constructive way to deal with it.
Cleary, managing director of Exact argues: “I recent article: “Most buy-to-let borrowers are Sometimes, broad brush, one size fit all
believe buy-to-let should always have been amateurs, and many are highly leveraged, centralised regulation might not be the best
regulated because to not regulate it created a having bought the wrong properties in the response.
sub class of borrower;” note borrower, not wrong place.” Not – you notice – used the Property investment – like all types of
investor, so the issue here is about regulating wrong mortgages to buy them. Regulation investment – have a risk attached, but
the mortgage used to purchase the investment. doesn’t cover this. regulating the mortgage used to buy it won’t
He continues: “…the argument that buy-to- If that sounds strange then think of the role negate that and could actually give the investor
let is a commercial transaction carried out by of a regulated residential mortgage broker a false sense of security that they are somehow
professional investors is flawed”. Without advising on a regulated residential loan: they protected from the risks of a volatile market.
wishing to contradict, I would suggest that are responsible for finding an appropriate loan Where buy-to-let goes wrong is often as a result
statement is only half true; buy-to-let is a for their client – but wouldn’t offer any opinion of the property purchased – not the loan used
commercial transaction and trying to make out as to the suitability of the actual property. to purchase it with. We are happy to work with
it isn’t is not particularly helpful, but I do agree With regard to the mortgage, a lender will the FSA to discuss potential solutions, but the
wholeheartedly that many landlords have been assess the property being purchased as good current market seems to have enough problems
far from sophisticated commercial investors or security for a loan and a valuer would need to right now and it seems a shame to spend
borrowers and even fewer have understood that certify the amount of rent the property would millions on a magic bullet that I doubt will hit
it is a commercial transaction they are entering. be expected to earn which would be used to its intended target.
www.mortgageintroducer.com September 2009 Mortgage Introducer
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44
Produced with Yudu - www.yudu.com