FSA Regulation Should Cover Buy To Let Market - Cable

7.09.00am BST (GMT +0100) Thu 23rd Jun 2005

Liberal Democrat Shadow Chancellor, Dr Vince Cable MP today called for FSA regulation to extend to the buy to let mortgage market. Dr Cable said:

"The scale of the buy-to-let mortgage market is vast with more and more people choosing to fund their retirement through investing in property. Given the scale of buy-to-let, it is questionable why the Government is focusing on small parts of the market, and does not consider buy-to-let mortgages worthy of the same protections.

"Buy-to-let mortgages should be promoted in a responsible way, stressing the obligations that are required of investors which include servicing mortgage debt, paying for repairs and property maintenance, and covering the costs of the property whilst in periods of voids.

On the lending criteria of some buy to let mortgages, Vince Cable went on to say:

"During the phenomenal growth in the buy-to-let sector the vast majority of lenders have followed prudent policy, recently however, we have seen less responsible lending being offered.

"It is not prudent to be lending at levels which only cover lenders' interest payments and leave nothing for when the property is vacant, for repair and maintenance, or letting agents' fees. That is bad for the borrower and bad for the sector.

On rogue buy-to-let syndicates which make speculative gains, in combination with inappropriate lending policies that broaden the scope for mis-selling, Vince Cable added:

"The DTI have started to close down the worst offenders, but picking off the worst on a one-by-one basis is insufficient to protect consumers and the reputation of the wider property investment sector."