Buy to let 'statement of practice' ahead of FCA regulation

Buy to let 'statement of practice' ahead of FCA regulation

Buy to let mortgage lenders who are in the Council of Mortgage Lenders have revealed a new ‘statement of practice’ aimed at making their products more transparent and emphasising the responsibilities of being a landlord.


Endorsed by the Residential Landlords Association, the Association of Residential Letting Agents, the Association of Mortgage Intermediaries, the Intermediary Mortgage Lenders Association, and the British Bankers Association, the statement comes from 31 lenders who together making up an estimated 90 per cent of the buy to let mortgage market.


It also explains how from April 2016 the "consumer" buy to let lending framework will be established under the Financial Conduct Authority. 


This will consist of three types of lending:


- mortgages regulated by the FCA, like residential mortgages. These are when the property is either partly occupied by the borrower or let to an immediate family member;


- mortgages regulated by the FCA under the Mortgage Credit Directive Order 2015. These are "consumer" buy to let mortgages as defined by the order;


- mortgages not regulated by the FCA. These are mortgages which are predominantly for a business purpose.


"Lenders know how important it is to have a transparent mortgage market, in which borrowers can have confidence, and where lending policy is both responsible and clearly understood” says CML director general Paul Smee.