FSA must not regulate buy-to-let: BSA

The Building Societies Association (BSA) has urged against buy-to-let regulation when the FSA sets its final rules for the mortgage market in the coming months.

In the mortgage market review in October, the FSA said it wanted to regulate buy-to-let mortgages, although it recognised this was a decision for the Treasury to make.

However, in December, the Treasury said extending regulation to buy-to-let mortgages would fail to reflect investment decisions made by buy-to-let borrowers.

The BSA agrees with the Treasury, saying the decision to enter into the buy- to-let market is an investment decision made by the borrower and is very different to the mainstream mortgage market.

Paul Broadhead, head of mortgage policy at the BSA, says: "Including buy-to-let mortgages in the same regime as owner occupied mortgages would not be practical. Subjecting buy-to-let investors to affordability and suitability assessments in the same way as owner occupiers is not appropriate, and would result in a further constraint in the supply of quality housing to the private rental sector."

In its response, the BSA welcomed the Government's proposals to extend FSA regulation to second charge lending as this will make a single regulator responsible for both first and second charge mortgages.