Buy-to-let lenders who are members of the Council of Mortgage Lenders have signed up to a new statement of practice to help provide greater reassurance to advisers and borrowers.
This will set out how responsible buy-to-let lenders operate and is endorsed by the Residential Landlords Association, the Association of Mortgage Intermediaries and the Intermediary Mortgage Lenders Association.
CML director general Paul Smee said: “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.
“The new buy-to-let statement of practice reflects what responsible lenders already do and offers a clear explanation of how buy-to-let lenders operate.
“We hope it will make a valuable contribution to understanding the buy-to-let lending environment.”
The statement sets out the over-arching principles individual lenders use to determine their lending strategy and practice for issues such as affordability, financial difficulty and fraud.
It has been adopted by 31 lenders representing an estimated 90 per cent of the buy-to-let market, including The Nottingham Building Society.
Chris Parker, The society’s head of intermediary sales, said: “We pride ourselves on transparency and clear explanations of obligations so for us it was a no-brainer to sign up to the statement of practice, which can only benefit customers.
“We welcome the statement, which can only help build borrower confidence and help them understand the buy-to-let landscape, and are pleased to have signed up.”
| Period | Buy to let mortgages outstanding at the end of period (number) | Buy to let mortgages outstanding at the end of period (£m) | Buy to let mortgages outstanding at the end of period (% of total by value) |
| 1999 | 73,200 | 5,400 | 1.1 |
| 2004 | 576,700 | 56,900 | 6.5 |
| 2007 | 1,025,500 | 120,600 | 10.2 |
| 2010 | 1,309,400 | 151,600 | 12.2 |
| 2013 | 1,528,200 | 174,000 | 13.6 |
| 2014 | 1,630,600 | 188,300 | 14.5 |
Next year the consumer buy-to-let lending framework will be established under the FCA to comply with the Mortgage Credit Directive.
This will mean buy-to-let lending will fall into one of three types. The three types are: mortgages regulated by the FCA, such as residential mortgages; Mortgages regulated by the FCA under the Mortgage Credit Directive Order 2015, which are defined as consumer BTL; and mortgages not regulated by the FCA, which are predominantly for a business purpose.
Adviser view
CML data has shown that B2L is gaining traction among investors and this trend will continue, according to Steve Bolton, founder of Bournemouth-based Platinum Property Partners. He said: “Buy-to-let was the fastest-growing area of the mortgage market last year, and interest in the sector is holding strong in 2015. Our research shows that two in five current landlords plan to expand their property portfolio this year, and new pension freedoms are likely to increase the number of retirees using buy-to-let as part of their retirement planning.”
