In its February consultation on buy-to-let mortgages and the Mortgage Credit Directive (MCD), CP15/3, the regulator said it thought consumer buy-to-let made up 11% of the total buy-to-let market.
It said that around 160,000 buy-to-let mortgages were estimated to have been sold in 2013 which meant that the current size of the consumer buy-to-let market was approximately 17,600 mortgages a year.
The regulator analysed MLAR (Mortgage Lenders and Administrators) data for quarter two 2014 and decided that no more than 100 lenders would register to carry out consumer buy-to-let mortgages. It is expecting around 800 brokers to register with it to carry out broking activities for consumer buy to let.
Respondents to the consultation disagreed widely over estimates of the number of firms which would register with the FCA for this activity.
Some respondents thought around 30 mainstream buy-to-let lenders would register and that most smaller broker firms would not apply due to the costs involved.
Chief executive of the Association of Mortgage Intermediaries Robert Sinclair said there could be a number of risks involved in getting the size of the market wrong.
“There may be an issue with the costing of regulation and the fees involved if the market turns out to be a lot bigger.” Sinclair said.
“It could also lead to a mis-match between market expectations and consumer demand. Buy to let is largely broker-led, not may lenders directly advise on their products. There may be a situation whereby a consumer goes to a broker for a buy-to-let mortgage and that broker can’t arrange it because they don’t have the permissions and perhaps no one in the area has the permissions to do this either.”
The FCA’s reasons for disregarding the concerns were that respondents had not presented strong evidence to challenge the original cost benefit analysis.
A policy statement on the registration fees for consumer buy-to-let firms is due to be issued this month. The regulator also wants firms to respond to its March 2016 fees consultation which will lay out proposals for periodic fees and Financial Ombudsman Service levy.
