CML members adopt new statement of practice on buy-to-let mortgage lending
Published: 7 April 2015
Buy-to-let lenders who are members of the Council of Mortgage Lenders are adopting a new statement of practice, designed to provide clarity about how responsible buy-to-let lenders operate.
The statement, released today, reflects existing good practice and aims to ensure that there is a clear explanation of the obligations of buy-to-let borrowers on their mortgages. It signposts additional information from other organisations about the responsibilities of being a landlord, and is endorsed by the Residential Landlords Association, the Association of Residential Letting Agents, the Association of Mortgage Intermediaries, the Intermediary Mortgage Lenders Association, and the British Bankers Association (BBA).
31 lenders representing an estimated 90% of the buy-to-let market have already adopted the statement of practice. All CML members who offer buy-to-let mortgages are expected to adopt it over the course of 2015.
The statement sets out the over-arching principles that individual lenders use in determining their own lending strategy and practice in relation to:
- Lending principles
- Information given to customers
- Customer responsibilities
- Lender responsibilities on affordability
- Handling financial difficulty
- Fraud prevention; and
- Complaint handling.
Next year, when the "consumer" buy-to-let lending framework is established under the FCA to comply with the Mortgage Credit Directive, buy-to-let lending will fall into one of three types:
- Mortgages regulated by the FCA like residential mortgages. These are when the property is either partly occupied by the borrower or let to an immediate family member.
- Mortgages regulated by the FCA under the Mortgage Credit Directive Order 2015. These are "consumer" BTL as defined by the Order.
- Mortgages not regulated by the FCA. These are mortgages which are predominantly for a business purpose.
The statement of practice will cover any residential buy-to-let lending not otherwise covered by FCA regulation.
CML director general Paul Smee said:
"Lenders know how important it is to have a transparent mortgage market, in which borrowers can have confidence, and where lending policy is both responsible and clearly understood. The new buy-to-let statement of practice reflects what responsible lenders already do and offers a clear explanation of how buy-to-let lenders operate. We hope it will make a valuable contribution to understanding the buy-to-let lending environment."
Notes to editors
1. The CML has 128 members, who together represent around 95% of the UK mortgage market.
2. The full Statement of Practice is available below. Lenders who have already adopted it are:
1. Accord Mortgages
3. Bank of Ireland
5. Coventry Building Society
6. Deutsche Bank
7. Fleet Mortgages
8. Foundation Home Loans
9. GE Money
10. Hinckley & Rugby Building Society
13. Kent Reliance
14. Leeds Building Society
15. Lloyds Banking Group
16. Market Harborough Building Society
17. Monmouthshire Building Society
18. National Counties Building Society
19. Nationwide Building Society
20. Nottingham Building Society
21. Paragon Mortgages
22. Precise Mortgages
23. Principality Building Society
24. Royal Bank of Scotland (inc. NatWest)
26. Skipton Building Society
27. Tipton & Coseley Building Society
29. UK Asset Resolution
30. Ulster Bank
31. Virgin Money
3. The statement applies to all new buy-to-let lending, except where it is covered by other FCA rules. The aspects of the statement that relate to complaint handling and arrears management also apply to existing buy-to-let lending, as well as new lending.
4. Summary data on the UK buy-to-let mortgage market is: