Brokers demand BTL regulation

More than half of mortgage brokers want the FSA to regulate the buy-to-let (BTL) market.

According to mortgage services firm Exact, 54% of 550 intermediaries polled want official regulator intervention. At present the BTL market is unregulated.

Additionally, the poll suggests two in every five brokers say at least 90% of their BTL clients were amateur landlords. A majority (63%) said more than 75% of their BTL clients were amateur investors.

Alan Cleary, Exact managing director, says BTL should always have been regulated and the ready availability of mortgage finance and credit up until two years ago opened the door for a lot of amateur investors.

"The lack of regulation meant it was too easy for amateurs without a commercial head on their shoulders to jump on the bandwagon," he says.

"It was a mistake to assume that because BTL was viewed as a commercial endeavour, it could be left unregulated. The number of amateurs landlords in the private rented sector with sizeable portfolios now well under water is proof of the fact."

BTL arrears rates are above the market average according to official statistics. Exact has assessed the credit quality of more than £4bn of specialist loans and its assessments suggest a large proportion of arrears are caused by relatively few individuals who invested unwisely at the height of the market.

Cleary adds that if landlords get behind on their mortgage payments, their tenants can be in danger of being turfed out if the property goes to possession.

He adds: "The lack of regulation in the sector makes it much harder for the government to protect these people.

"The FSA has said it intends to review regulation of the buy to let sector - I would suggest there is nothing to be reviewed. Mistakes need to be corrected."