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The Government may be looking to regulate buy-to-let mortgage lending – but this is not necessarily a bad thing and will only make your investment safer.

In a recent report by the Financial Services Authority chairman Lord Turner, he laid out plans to change how the Government looks at mortgage lending. Many possibilities were floated by Turner, but one of the most important was the possibility of regulating buy-to-let mortgages.

Right now the Government and its watchdog the FSA have no control over buy-to-let mortgages. If someone lends a bad loan then they have no rules to stop the lender or the broker. They cannot stop rogues ripping people off and they cannot intervene if they think the buy to let mortgage lender is being unreasonable, like they can with mainstream, regular mortgages.

But that could all change soon. In his review of the financial services sector, Lord Turner said: "[We] will consider whether more effective regulation of the mortgage market, through tighter conduct rules or direct product regulation, would require the extension of the FSA's remit to cover second charge mortgages and buy-to-let mortgages."

The Government is set to launch its new plans for the mortgage market next month, and the proposals for buy-to-let regulation could well be included in the new rules. The Government thinks that buy-to-let mortgages need to be watched more carefully.

What would this mean to you? Well it would mean that your mortgage adviser, who is already probably regulated when he or she advises on other types of mortgages, will also be watched more carefully when he or she advises you on buy-to-let. Also the mortgage lenders will be carefully watched so as to make sure all their practices are legitimate.

So for buy-to-let borrowers, regulation can only be a good thing. It means careful lending careful advising and good investments all round.

SOURCE: FSA, 18/03/09

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