12:26 PM, 25th October 2012, About 10 years ago
The FSA Mortgage Market Review rules will come into effect on 26 April 2014 and I have listed the FSA’s own summary at the bottom of this article for the avoidance of factual doubt.
Will these new rules have a direct effect on Buy-to-Let?
Technically no, as Buy-to-Let is seen as a commercial loan and does not fall under FSA regulations (except where you plan to live in the property yourself in the future, or have a close family member live in the property). However what you often see with non-specialist BTL lenders is the standardisation of mortgage policy across both residential and BTL loans.
The key fear for the PRS is the abolition of Interest Only mortgages, and apart from the fact that these are not being ruled against even in regulated mortgages the FSA are stating that Interest Only is a credible option where a repayment strategy exists. Many people would argue that as a business model the sale of property could be used as just such a strategy.
It has been widely reported that the MMR will be another negative factor on the recovery of the housing market, but in practice mortgages are already not generally available that do not fit the rules below, so this should will have little effect.
Overall I see little to fear for the housing market and PRS other than a formalisation of rules that have already mostly been adopted by a cautious Banking industry. If funding does become harder to source for the PRS this will be down I believe to the lack of appetite by Banks, and the inability by government to force them to lend rather than enforced FSA regulation.
If you have any other views it would be great to see your comments.
FSA Summary of the MMR regulatory reform package:-
Non-deposit taking mortgage lenders (non-banks)
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