Statement of Practice for BTL lending

As an attempt to avoid regulation of the BTL Mortgages, the Council of Mortgage Lenders alongside the Intermediary Mortgage Lenders Association and the Association of Mortgage Intermediaries published a new Statement of Practice for buy-to-let mortgages this week.

The CML claim 31 BTL lenders who represent approximately 90% of the BTL mortgage market have  adopted the statement of practice and the remaining lenders are expected to do so over the course of 2015.

The Statement of Practice for BTL mortgage lending

• The responsibilities of lenders, with a commitment to lend responsibly and treat customers fairly – echoing the broad principles of fair treatment that underpin the statutory regime of mortgage regulation protecting consumers.

• An undertaking to provide information that is fair, clear and not misleading, and in a form broadly consistent with the existing “key facts illustration” and the proposed European standardised information sheet. There should also be clear statements on fees and charges, monthly repayments and an overall cost calculation.

• The need to make a robust assessment of mortgage affordability, allowing for conditions in the rental market, the impact of future rate rises, rental voids and arrears, and other costs. There should also be a commitment to take extra care if the borrower has an impaired credit history and to consider whether it is appropriate to lend in those circumstances.

• The responsibilities of buy-to-let landlords, underlining their obligations to be competent and capable, and to accept that their borrowing is a commercial decision.

• Specific responsibilities of landlords to comply with legal requirements for letting property, treating their tenants fairly, maintaining and insuring the property adequately, and accepting the commitments associated with taking out a mortgage.

CML director general Paul Smee commented:

"Lenders know how important it is to have a transparent mortgage market, in which borrowers can have confidence, and where lending policy is both responsible and clearly understood. The new buy-to-let statement of practice reflects what responsible lenders already do and offers a clear explanation of how buy-to-let lenders operate. We hope it will make a valuable contribution to understanding the buy-to-let lending environment."

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