The majority of landlords support stronger regulation of buy-to-let mortgages and advice, according to a survey conducted by LSL Property Services plc, which owns the UK's largest lettings agent network.
However, the firm stressed that not all landlords are the same, so the Treasury and FSA must resist the temptation to impose “one size fits all” regulation.
Nearly 60% of landlords favour proposals to regulate buy-to-let mortgage lending, believing it will provide additional protection for landlords raising finance. Landlords are also in favour of regulating advice provided by intermediaries and introducers in respect of buy-to-let loans, with 59% saying it will help root out unscrupulous introducers and intermediaries.
David Brown, Commercial Director of LSL Property Services plc, commented: “It may be surprising that many landlords advocate further regulation - but this does reflect a general desire for additional investor protection, and if it leads to a greater professionalisation of the sector, it should be applauded.”
But while they support regulation to protect the inexperienced, 55% of landlords with seven or more years’ experience are opposed to the regulation of mortgage products, arguing that they don’t need the additional administrative burden.
Mr Brown went on to say: “The majority of experienced property investors do not necessarily need nor want the added protection or burden of increased regulation. Most are able to secure their own finance and are skilful at managing brokers and lenders to obtain the products they need. Long established portfolio landlords are less likely to benefit from tighter regulation. Indeed, they see a real risk that disproportionate regulation may force more lenders and brokers from the sector, exacerbating the current shortage of buy-to-let mortgage finance.”
He concluded: “Increased regulation would potentially help less experienced landlords, but it needs to be simple and proportionate. The FSA and the Treasury should avoid using a sledge-hammer to crack a nut. Landlords have different levels of experience, and different requirements. With a one size fits all approach to regulation, any benefit for inexperienced investors could potentially be outweighed by the damage to the sector if it ended up making it less attractive for larger scale landlords to invest.”
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