Mortgage brokers are at serious risk from claims arising out of buy-to-let transactions, warns Fishburns Solicitors partner Harriet Quiney.
Speaking at Fishburns’ financial services seminar last week, Quiney said if borrowers use false information to obtain bigger mortgages than they would otherwise have been given, their professional advisers could be at risk.
She said: “Where borrowers have been involved in dubious practices such as failing to reveal the true purchase price of the property in the hope of obtaining a bigger mortgage, then mortgage brokers who are aware of the true purchase price of the property and do no pass it on are at risk of claims from out-of-pocket lenders, even if they are not aware that the borrower is seeking to defraud the lender.”
Quiney also voiced concerns over the sustainability of recent rapid growth in the buy-to-let market. She said: “In Wales, growth in the buy-to-let sector increased by a third in January, February and March this year. That is about 11 per cent a month and property prices have increased by about 25 per cent over the last year.
“I think everybody is asking themselves it this can be sustained and what will happen if there is a crash?”
Quiney said buy-to-let is more volatile than the residential market and some borrowers seem to be overextending themselves. She said: “An interest rate rise could push these borrowers into bankruptcy.”