In its response to the Prudential Regulation Authority’s (PRA) consultation on underwriting for buy-to-let mortgage contracts, the CML said further intervention in the market, in addition to the 3% Stamp Duty premium and changes to landlord mortgage interest relief, could throw the strength and sustainability of the sector into question.
It added that the PRA should take into consider that firms may need to adjust lending plans in response to the outcome of the EU referendum vote, adding further fuel to the fire.
The CML said: “As the industry continues to respond to these headwinds, we believe there is a risk that the PRA’s proposals could magnify the effects on the buy-to-let sector. It is possible that the cumulative impact of intervention targeted at the buy-to-let sector could affect its strength and sustainability.”
The trade body also highlighted the potential impact of the proposals on firms which lend to high-net-worth clients, which the CML said should be defined as those with a net annual income of more than £300,000, or assets worth more than £3m.
It suggested that lenders advancing fewer than 100 mortgages a year on a rolling basis to high-net-worth clients should be excluded from the PRA’s plans.
“Lenders in this market are also in many instances too small to be significant from a macro-prudential perspective,” the CML said.
“Finally, it is important that the PRA sets out a clear timetable for implementation of its measures. Lenders will need to have sufficient time to make adjustments to the way in which they run their businesses,” it added.
“We would like to discuss the details of a timetable for implementation with the PRA, and would also urge that there should be transitional arrangements covering loans that are in the pipeline during the implementation period.”
