Government to regulate buy-to-let mortgages

Posted: 26 Nov 2009 09:48:40 GMT

The government has proposed more stringent regulations on home loans for buy-to-let and second charge mortgages.

Sarah McCarthy-Fry, exchequer secretary, says that these types of mortgages will now come under the scope of the Financial Services Authority (FSA) in an attempt to offer stronger protection for customers and to make the housing market more stable.

The consultation paper also includes plans for to protect borrowers with FSA regulations requiring fair treatment of customers in instances where lenders sell on mortgages to third parties.

Further regulation of the mortgage market is hoped to stamp out excessive property prices in the future.

Michael Coogan, director-general of the Council of Mortgage Lenders says: "2010 is clearly going to be a year of regulatory change for mortgage lenders, but it's important that change should have a clear rationale and a clear set of outcomes."

The aim in the buy-to-let sector is to restrict loan values on these types of properties in an attempt to prevent landlords from over-leveraging themselves.

© Houseladder Ltd