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Buy-to-let mortgage lenders sign up to new good practice statement
Buy-to-let lenders who are members of the Council of Mortgage Lenders have adopted a new statement of practice ahead of a change in regulation imposed by the EU.
The statement reflects existing good practice and aims to ensure that there is a clear explanation of the obligations of buy-to-let borrowers on their mortgages.
The statement is endorsed among others by ARLA.
A total of 31 lenders representing an estimated 90% of the buy-to-let market have already adopted the statement of practice.
The statement covers:
- Lending principles
- Information given to customers
- Customer responsibilities
- Lender responsibilities on affordability
- Handling financial difficulty
- Fraud prevention; and
- Complaint handling.
Next year, when the “consumer” buy-to-let lending comes under the Financial Conduct Authority’s regulatory remit to comply with the Mortgage Credit Directive, buy-to-let lending will fall into one of three types:
- Mortgages regulated by the FCA in the same way as 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 EU’s Mortgage Credit Directive Order 2015. These are “consumer” buy-to-let mortgages – generally speaking, where the borrower is an accidental landlord who did not deliberately get into buy-to-let, but who rented out a property they had been left in a Will or could not sell their previous home.
- Mortgages not regulated by the FCA. These are mortgages which are predominantly for a business purpose – ie, there has been a deliberate decision to go into buy-to-let in order to make money.
