The Tumer Report covers a broad range of sectors but has reserved its judgement on Buy To Let and second charge mortgages until September. If some of the commmentary on how they might restrict Loan to Income multiples might be applied in future goes ahead in its current form (such as 3.5 x Multiple applied whether interest rates are 12% or 4% rather trhan expressed as a%age of disposable income with in a minimum notional rate to cater for articially low rates like now !!!), then the Buy To Let lenders will be facing an uphill struggle.
There is an essential principle at stake which is being overlooked. Buy To Let is a business activity whether you own one or 350 properties. You are in it for profit and drawing a line between the owner with a single Buy To Let to enhance their overall retirement provision to the active landlord refurbishing property , extending others, perhaps even selling some to use up CGT gains would require the judgement of Solomon which has been remarkably lacking in the FSA to-date.
In its effort to regulate Buy To Let it is likely that the FSA will create a regulatory monster so as to embrace all the complexities of a Buy To Let property and the business aspirations of the borrower......this might add such a burden to the time and "real" cost of the process that borrowers will approach lenders on a commercial mortgage basis to avoid the FSA paper trail. After all, this is where Buy To Let came form and many professional landlords keep Buy To Let property in "pot" facilities at banks.... or do we think that the FSA proposes to move further up the lending scale to include all aspects of business lending ???
There is also a tendency for some commentators to suggest that the lender and broker to a transaction are giving investment advice to the borrower at point of purchase which is false. Quite correctly the Buy to Let mortgage or loan needs to suit the borrower's needs but whether the investment or is appropriate or will perform over time is the commercial decision of the borrower.
Read the Turner Report here.
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