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No regulation required

The buy-to-let market is unlikely to see any significant future innovation because it is mature and has already undergone its metamorphosis.

Brokers and lenders agree that the market remains buoyant and is not desperate for any new types of products or major changes.

It is also doubtful if many new lenders will enter the sector as it requires niche players and is already well populated.

Alexander Hall chief operating officer Andy Pratt says: “There are still a few tweaks required rather than any major changes. Rates are good at the moment and it is a mature market so there have not been any massive steps forward recently.”

Paragon Mortgages managing director John Heron says: “Innovation over the last 10 years has been staggering. You now have a wide range of tenancies and the arrears’ performance significantly outperforms the market so you have very few losses.”

On new lenders entering the sector, National Association of Commercial Finance Brokers chief executive Keith Heron says: “There is already a huge amount of competition so I am not sure there are too many coming into the market. Lenders in the market are already established and some of the big institutions may start looking but I cannot see a whole host entering.”

Pratt adds: “I think it is a year or two off before the big investment banks coming into the mortgage market then enter buy to let.”Regulation of the buy-to-let mortgage sector is not required, according to a number of market experts.

The majority of delegates at the round table agreed that, as transactions are commercial deals, they do not require the same level of protection as residential mortgages because customers are more savvy and often have had experience of getting mortgages.

It was also argued that sectors of the mortgage market, such as second-charge loans, carry far greater consumer risk and should be higher up the list of priorities for regulation, although a lone broker voice called for policing of the whole sector.

Paragon Mortgages managing director John Heron says: “BTL is a commercial product and if you regulate it, then you will have to regulate all commercial property transactions. The risk is also not the mortgage itself, it is the home. I am mystified by what regulation could be put in place.”

National Association of Commercial Finance Brokers chief executive Keith Heron says: “BTL should not be regulated. There are not many complaints about it or pressure from groups to regulate it. It is also much smaller than the residential market so it would be expensive to regulate.”

But London & Country mortgage specialist James Cotton disagreed with the Herons.

He says: “The idea that it is still a commercial sector is changing and the dynamic of the market is changing. There are now more inexperienced BTL investors and many are not experts on the mortgage market when they are buying property for the first time. It is difficult to justify not regulating the sector as the consumers involved are similar to those in the residential market.”


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