“MLA welcomes the opportunity to take part in the PRA’s consultation on buy-to-let (BTL) mortgage underwriting standards. It is important that lenders and regulators work together to ensure good standards in lending are maintained. The aim of making best practice an industry standard is commendable, as is the pursuit of a sustainable approach to BTL lending.
“On the face of it, most lenders will have little to fear from these proposals, especially given that many have already undertaken similar assessments. However, it is important that these rules do not set minimum standards at a level any higher than is necessary to achieve a sustainable level of activity.
“BTL plays a significant role in supporting the private rental sector to meet housing demand from the UK’s growing population. The consultation needs to bear in mind their potential effects on the supply of rented property and levels of rent, factors which are oddly excluded from the impact assessment. This is critical at a time when BTL is already feeling the full force of regulatory layering, with changes to stamp duty and mortgage tax relief underway and the debate ongoing about the macro-prudential controls which are still to be introduced. We assume the PRA standards and any FPC requirements will be aligned but we now have a further period of uncertainty before that can be clarified.
“We would also caution against a broad-brush ‘one-size-fits-all’ approach that risks dumbing down the market. It is encouraging that the rules include some flexibility for lenders to use other disposable income in affordability assessments. To make the proposals practical, the consultation should consider how lenders will need to model landlords’ costs and also how they calculate the level of rent for affordability assessments.”
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Notes to Editors
The Intermediary Mortgage Lenders Association (IMLA) is the trade association that represents mortgage lenders who lend to UK consumers and businesses via the broker channel. Its membership unites 43 banks, building societies and specialist lenders, including 16 of the top 20 UK mortgage lenders responsible for more than £180 billion of annual lending.
IMLA provides a unique, democratic forum where intermediary lenders can work together with industry, regulators and government on initiatives to support a stable and inclusive mortgage market. Originally founded in 1988, IMLA has close working relationships with key stakeholders including the Association of Mortgage Intermediaries (AMI), UK Finance and the Financial Conduct Authority (FCA).