Regulation of buy-to-let mortgages close at hand
An organisation set up to represent property owners and investors, is calling for the regulation of buy-to-let mortgages.
In a new report entitled “Responsible Regulation”, the British Property Federation (BPF) says such a move would lessen the risk of another “black hole of irresponsible lending” occurring in the future.
According to the BPF, the Financial Services Authority (FSA) and Treasury were aware of “dubious practice” in the residential property investment market as far back as 2005.
The body claims that lack of regulation meant lenders “threw money at buy-to-let borrowers” without checking “who they were lending to or what they were lending for”.
The Federation goes on to cite the demise of Bradford & Bingley (B&B) as a consequence of this.
B&B and other buy-to-let lenders have already written down large sums in connection with mortgage fraud.
The full extent of the fraud has yet to be revealed in the UK, and it is worth noting that a recent hike in the professional indemnity cover for UK law firms has been attributed, in part, to expected mortgage fraud claims yet to be brought by lenders.
However, regulation could be close at hand; last week The Independent reported that the FSA will be publishing proposals later this month for both the buy-to-let and second charge mortgage markets.