A body representing property investors has called for the buy-to-let mortgage market and property investments 'clubs' to be regulated. The British Property Federation believes regulation would stop the "reckless lending" that occurred during the 'boom'.
Mortgages for buy to let investments generally do not fall under Financial Services Authority (FSA) regulation as they are treated as business loans which allowed many new, inexperienced landlords to enter the buy to let market with ease throughout the 'boom'.
The British Property Federation is arguing that if buy to let loans were regulated in the same way as normal residential home loans, this would protect all landlords and also the wider housing market. In support of this arguement the Federation is evidencing equity release which is regulated by the FSA, and is questioning why this falls under regulation and not buy to let.
Ian Fletcher, BPF director of policy, said: “Many lenders simply threw money at buy-to-let borrowers during the boom without sufficient checks on who they were lending to or what they were lending for."
"Consumers have suffered as their buy-to-let dream turned sour and many buy-to-let lenders were at the root of our economic problems as organisations such as Bradford and Bingley found themselves over exposed to bad loans.”
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