Lenders are still trying to resist EU plans to have buy-to-let mortgages regulated, even though some have said it is a lost cause.
Now IMLA, the body that represents lenders who market their mortgage products primarily through brokers, has stepped into the row, sparked by remarks by Association of Mortgage Intermediaries director Robert Sinclair suggesting that the fight had been given up and that regulation is inevitable.
Landlord bodies have also been campaigning for buy-to-let mortgages to continue to be unregulated, saying that they represent a business transaction.
IMLA chairman John Heron said: “It is certainly not a forgone conclusion that buy-to-let will become a regulated product under the European Mortgage Directive, and it remains IMLA’s belief that buy-to-let should sit outside of the Directive.
“Buy-to-let is a commercial product and it simply cannot be regulated effectively via a consumer-focused regime. We believe that this also remains the position of HM Treasury, the Financial Services Authority and the Council of Mortgage Lenders.
“There is still some way to go before this issue is resolved and the political process has yet to run its course. We must ensure that the EU, MEPs and other member states appreciate the clear differences between buy-to-let and the owner-occupied market. For example, the standard affordability model does not work with buy-to-let because it is the income generated by the underlying asset that drives a lending decision, not the borrower’s ability to afford the mortgage.
“In addition, regulating the mortgage product itself does not address the risk to the property investor. The success of a buy-to-let investment depends on the decisions made by the landlord, such as what type of property they invest in, where they invest and which tenant groups they target. Those decisions will dictate the performance of their buy-to-let investment rather than the mortgage product they choose to finance their investment.
“Buy-to-let will be central to the growth of the private rented sector in the UK market and it is still in a fragile state of recovery following the credit crunch.
“Applying inappropriate regulation to the market at this stage could hamper its recovery and reduce much-needed finance for the private rented sector, at a time when tenant demand is clearly outstripping supply and is likely to do so for some time to come yet.”
Comments