Buy-to-let mortgages are not regulated. There are best practices that any reputable mortgage adviser or lender will follow and these are based on the practices and processes that apply in the residential mortgage market.
The Mortgage Credit Directive (2016) has also included Consumer buy-to-lets as a regulated product.
Consumer buy-to-let is defined as a contract which is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower.
The legislation sets out a series of circumstances that would constitute a buy-to-let customer acting for the purposes of business, and therefore take them outside the scope of the legislation.
These include where a customer:
- uses the mortgage to purchase a property with the intention of renting it out
- has previously purchased the property with the intention of letting it out and neither the customer nor a relative has inhabited it
- Already owns another property that has been let out on the basis of a rental agreement.
The legislation also enables a firm to presume that a borrower is acting by way of business if the agreement includes a declaration from the borrower that they are acting as a business and understand that they are forgoing protections offered by the legislation to consumers, unless the firm has reasonable cause to suspect that this is not the case.
As a reputable mortgage adviser we follow best practices and processes irrespective of whether a solution is regulated or not.
The Financial Conduct Authority does not regulate Let to Buy mortgages