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CML against Buy-to-let regulation - 23 February 2010

The Council of Mortgage Lenders (CML) has come out against Financial Services Authority regulation of buy-to-let lending, on the grounds that this sector of the UK mortgage market essentially involves commercial transactions with an investment dimension.

Responding to government proposals, the Council argues that regulation would not provide increased consumer protection and would almost certainly impinge on an "inappropriate range" of commercial transactions.

Neither would regulation address the issue of property investment advice (a key area that can result in problems for the mortgagor) or systemic risk in the buy-to-let lending sector.

The body sums up: "Fundamentally, the CML still believes that buy-to-let loans are essentially commercial transactions with an investment dimension, and should not be subject to retail mortgage regulation."

It adds: "Inappropriate regulation could further damage buy-to-let lending, which has shrunk substantially in the last two years, at a time when the government is separately promoting investment opportunities in the private rental sector."

The Council is, however, in agreement with proposals to extend regulation to cover second-charge mortgages, and to ensure that borrowers are sufficiently protected when lenders sell on mortgage books.

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