As lenders report increased business levels, and the latest figures from the Royal Institute of Chartered Surveyors reveal a rise in buy-to-let demand, it would seem that property investors are beginning to return to the market, flocking to property auctions to pick up property at distressed prices.
However, various industry figures have warned that FSA plans to bring buy-to-let mortgages under the regulatory scope could have a negative effect on recovery, as well as brokers dealing in the sector.
Jonathan Caplan, from short term lender Lowry Capital, said: “Many brokers are surviving on commercial deals right now as a way of avoiding regulation costs. If buy-to-let becomes a regulated activity it could put a lot of brokers under considerable financial strain.
“Although I don’t think regulation is a bad thing as such, as some first time investors were given bad advice when buying property, I don’t necessarily see how regulation would help with this, or benefit experienced landlords.”
The National Association of Commercial Finance Brokers (NACFB) has also expressed doubt about how buy-to-let regulation would protect consumers, commenting: “It seems a shame to spend millions on a magic bullet that we doubt will hit its intended target.”
The FSA stated in the recent Mortgage Market Review discussion paper that regulating the commercial transactions would not only protect novice landlords who have limited understanding of property investment, but also help lenders prevent losses and mortgage fraud associated with buy-to-let.
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