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Regulation of let-to-buy

This article is part of
Guide to Let-to-Buy

A spokesman for the regulator states it viewed let to buy as essentially a name for converting your current residential mortgage into a buy-to-let mortgage, where there is a second property to be purchased and lived in.

The watchdog expects firms offering this service to stipulate that your client must provide proof that they are not going to stay in the first property.

Evidence must be provided as with let to buy the regulator acknowledges there is an issue of gaming – as there is with buy-to-let - but in this case there is a second property involved.

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But, other than ensuring let to buy is not being used to disguise what really should be a residential mortgage, the spokesman for the watchdog says this area is unregulated except for the onward purchase of a residential property.

David Hollingworth, associate director of London & Country Mortgages, says while the rental property is not regulated the mortgage on the new home purchase will fall under FCA regulation.

However Rob Thomas, director of research at the Wriglesworth Consultancy, says if you switch to a buy to let mortgage on the property you are renting out it will not be subject to consumer regulation as it is deemed a commercial loan.