Buy-to-let mortgages 'should be regulated'

Housing investors' group the British Property Federation (BPF) has called for buy-to-let mortgages to be regulated by the Financial Services Authority.

The group, which represents the interests of buy-to-let investors, believes that the mortgages should be regulated in the same way that most other home loans are treated - as opposed to being classed as a business loan.

According to the BPF, the resulting "crackdown on reckless lending" would protect investors from being allowed to make unwise property decisions.

It says that this lack of regulation lies at the root of financial problems in the sector that only came to light in the more general downturn of 2008, after years of failure to check on who was borrowing buy-to-let money.

BPF director of policy Ian Fletcher said that many buy-to-let lenders had caused the financial crisis by taking on bad loans.

"We need to make sure the property-fuelled meltdown doesn't happen again," he added.

"Professional landlords have suffered as a result of banks refusing to lend."

The changes, which are being backed by Savills Private Finance, also call for property clubs to be FSA-regulated.

However, buy-to-let landlord Jeremy Head said that it is incumbent on investors themselves to do thorough research before looking to "make a quick buck".

"This would just add another layer of paperwork to the whole process," he added.

"If you are getting into buy-to-let it's about getting into a business, and you have to take what you are doing very seriously."

IMAGE Gareth Fuller/PA Wire