Speaking at the forum in Cardiff on Wednesday, Ying Tan, managing director at The Buy to Let Business (pictured), said let to buy should be kept as a business transaction.
Tan went on to criticise the decision to classify any buy to let as a consumer decision.
“If you’ve chosen to let a property out, you’ve chosen to keep that property and made a conscious choice to rent it it out, so why is it being treated as a consumer decision? It’s not, it’s a business decision,” Tan said.
The concept of consumer buy to let came about to make sure the UK mortgage market complied with Europe’s Mortgage Credit Directive.
If a property owner is renting out a property which they formally lived in and had accidentally become a landlord, it will be referred to as a consumer buy to let and regulated by the Financial Conduct Authority (FCA) from March 2016.
However, some exemptions will apply and borrowers will have the opportunity to sign a disclaimer stating it is a business transaction.
There is a fear that buy-to-let lenders will stop offering let-to-buy products in much the same way they withdrew from the family buy-to-let mortgages. Family buy to lets became subject to a full affordability assessment following the arrival of the Mortgage Market Review.
Tan added: “We need to ensure we work with the lenders so that they don’t sideline it because it falls under the scope of regulation. It is potentially a big area of the market. That’s exactly what happened with family buy to lets and I know I’m going to be lobbying very hard for that.”
A straw poll of brokers in the audience revealed that almost everyone in the room had dealt with a let-to-buy case in the last 12 months.
Doug Hall, director of 3mc, said given the demand for let-to-buy mortgages from the public, brokers could not afford for mainstream lenders to withdraw their products because of the threat of regulation. He was optimistic that lenders would embrace consumer buy to let because let-to-buy transactions were commonplace.
“My hope is that when they start doing consumer buy to let within the regulated area they will start accepting family members again.”
Paragon Mortgages said it would be reviewing its position on let to buy following last year’s announcement that the sector would face regulation.
