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Arla and lenders offer BTL charter

The Association of Residential Letting Agents has teamed up with a panel of mortgage lenders to issue a charter for buy-to-let lending.

Birmingham Midshires, GMAC, NatWest, Paragon and Standard Life Bank have got together with Arla to draw up the charter which lays down guidelines for buy-to-let investors, mortgage lenders and letting agents.

The charter sets out what an investor should know when getting involved in buy to let, such as the need to regard the investment as medium to long term, making objective business decisions, the fluctuating nature of the rental market and the need to take advice from letting agents and financial intermediaries from the outset.

It also suggests that lenders need to make sure that their forecasted rental inc-ome is secure and reasonable, provide clear information on their products and their obli-gations and not lend borrowers more than they can afford to repay.

Under the charter, letting agents should have a comprehensive understanding of the law and regulations governing letting and an in-depth knowledge of local market conditions, including client accounting and an easily accessible complaint process.

The Arla panel is aiming to out more resources in researching the letting and lending aspects of the residential investment market. Arla claims to have pioneered the launch of buy to let in 1996 and says it believes there is long-term growth in the private rented sector.

Chairman John Crossley says: “Buy to let is neither a quick buck mechanism nor a liquid investment. It is an investment that requires the investor to take professional advice and to have reasonable expectations.

“Fair returns and steady appreciation are most likely to be gained from modestly priced properties. Landlords will come in to the rental market through judicious use of buy-to-let mortgages.”

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