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FSA warns Treasury on buy-to-let market risks

The FSA is concerned about risks to investors in the buyto-let market, adding to pressure on the Treasury to regulate the sector.

At last week&#39s Building Societies&#39 Association conference, FSA director of high-street firms Sarah Wilson said the FSA has warned the Treasury about potential problems in the sector. She said “people are tempted by low inflation and high ret-urns and forget about the risks”.

Top brokers believe the sector should be regulated like residential mortgages because it includes a lot of smaller investors. Charcol senior technical manager Ray Boulger says his firm will treat buy-to-let as if it were regulated from the start of N3 in 2004 and wants the sector regulated. He is hopeful the FSA and Treasury are willing to listen to the industry&#39s views.

Boulger also raised concerns at the conference about equity release. He said advising a client to release equity and pay interest at 7 per cent to invest with a return of 4 per cent could be seen as a missale.

Wilson said: “It is a matter for the Treasury that buy-to-let has been left out of regulation.”

Treasury spokesman Simon Moyes says: “We are doing extensive consultation but our view is that buy-to-let is a business transaction and does not need to be regulated.”

BSA report, p9

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