NLA Expects New FSA Initiative to Increase Mortgage Costs for Buy to Let Landlords

Yesterday, on October 20th, the National Landlords Association (NLA), UK leading national independent body for residential landlords, expressed its concern over the statement by the Financial Services Authority made on Monday, October 19th. In the opinion of NLA experts, the proposed regulation of the buy to let sector in the UK might result in an increased cost of borrowing for buy to let landlords.
Let us remind that the FSA wants to impose tighter control on the UK mortgage market by banning self-cert mortgages and by introducing affordability tests. The FSA is determined that the measures it outlined will help resolve the problems of the UK mortgage market caused by the economic downturn as borrowers will only be granted mortgages they can actually support.
The National Landlords Association does agree the proposed measures will be of help to small landlords who have no or little experience in the buy to let business, but they will definitely pose problems for professional landlords who have long been running their own buy to let businesses and do not need the same level of protection as small landlords do.
In the opinion of Mr. David Salusbury, National Landlords Association chairman, the major challenge about FSA’s proposals will arise when it comes to definitions. The FSA will have to define “amateur landlords” and “large property portfolios” in case it implements the new rules. The chairman is determined that FSA’s biggest problem is trying to make borrowers and lenders believe that the housing crisis will not repeat, while what the watchdog really should be doing is encouraging banks and building societies to lend more. The NLA thinks that the recovery of the UK housing market is taking so long because mortgage availability is extremely scarce, causing lack of housing stock for buyers and tenants.
Commenting on the possible impact of regulation proposed by the FSA on the buy to let sector, Mr. Salusbury said that professional buy to let landlords do not really need any regulation as they access their buy to let businesses in a financially sound manner.