CML - Regulation could damage buy-to-let

The government could risk damaging the private rented sector if it increases regulation of the buy-to-let market.

This is the view of the Council of Mortgage Lenders (CML), which said "inappropriate" regulations could offset the effects of other government policies brought in to boost the rental sector.

In the latest issue of its News and Views publication, the CML has welcomed proposals from the Treasury to increase regulation of the mortgage market, but suggested this should not incorporate the buy-to-let sector.

"Proposed regulation of buy-to-let is inappropriate because it does not address the key issue of advice on whether or not to invest in property," the organisation said.

"In our view, that is the main source of potential consumer detriment – not the decision to borrow to complete the transaction."

The CML also said increased regulation could deter potential landlords from entering the market at a time when the buy-to-let sector is in the first stages of a fragile recovery.

Recently-published data from the organisation revealed that 25,800 new buy-to-let loans were approved in the final quarter of 2009, up from 23,700 in the previous three months.

However, the total number of approved deals fell 58 per cent from 2008 to 2009, from 222,700 to just 93,500.

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