to lend. Equivalent risk with near double the margins compared to prime residential. More lenders will be looking to enter the market and so it comes to linking that gap together with an intermediary. Intermediaries need to do their homework however to get into establishing buy-to-let deals. Coreco director Andrew Montlake says that he thinks the issue with buy- to-let is that there is a lot of for a good broker to take into account when looking at buy-to-let. “It is not as simple as just looking at the cheapest rate. You need to look at the investment decisions that the client has taken for wanting to get into buy-to-let. Is it for top-up pension income, short term capital
Buy-to-let regulation
When the government introduced mortgage regulation in 2004 it decided to leave buy-to-let outside of regulation. In their view there was a distinction between owner-occupiers who faced losing their homes if things went wrong and buy- to-let landlords who do not face the same risks. For this reason it chose not to regulate buy-to-let. Since then, many have pursued buy-to-let with the aim of regulating the sector. In November 2009, the Treasury published a proposal to give the Financial Services Authority power to regulate buy-to-let mortgages in the aftermath of the credit crisis and the financial fallout as a direct result of poor investment in buy-to-let. Their reasons also included concern that the poor decisions made by inexperienced landlords would not only damage their own finances but also have knock-on effects on tenants, whose homes are at risk if their landlord is unable to keep up repayments on a mortgage. Consultation to the proposal closed on 15 February 2010. The industry responded with such force that on 26 March 2010, the Treasury published a summary of responses that conceded: “The government is mindful of concerns about the regulation proposed in the consultation, especially in view of the importance of the private rented sector and has decided to reconsider the scope and form of the regulation to address these issues.” However the European proposals for a directive on lending and borrowing, published on 31 March
growth, pure yield etc. Brokers also need to have an understanding of bridging and when landlords blur into the grey areas of commercial borrowing. “Experience counts for a lot in this sector and many landlords are not afraid of shopping around so know when a broker is not as adept as some of the existing brokers who have been in this market for many years. “That said, mortgage broking has never been rocket science and a bit of hard work at the outset to completely understand this area can pay dividends.” The bar is set and the market is there for the taking. It’s down to brokers to get in on the action. n
2011 and in its current proposition, the EU directive will also capture buy-to-let lending within its scope. Paul Broadhead, head of mortgage policy at the Building Societies Association, said: “Buy-to-let lending is more akin to a commercial transaction and regulating it in the same way as a residential mortgage for an owner occupier is inappropriate. “Buy-to-let mortgages have different creditworthiness assessments than residential mortgages and take into account the rental income ensuring that allowance is made for void periods.” The BSA is not alone in opposing the regulation of buy-to-let lending. The Council of Mortgage Lenders, the British Bankers’ Association, the Association of Mortgage Intermediaries and the Treasury have all said they opposed the views of the European mortgage directive including buy- to-let regulation. However Robert Sinclair, director of AMI, said that it may be time to concede that buy-to-let would finally come under regulation. He said: “We’re probably not going to win the debate therefore we have to work out how to structure what we will want out of this. “We’ve got to change European thinking how that buy-to-let model structure works because it’s been identified that this is going to be a fundamental part of what forms the fabric of the UK going through the next decade.” The directive is still under consultation however it seems as if the question of whether to regulate buy-to-let may be coming to a close.
7
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