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Regulated Mortgage Contracts

from "UK Landlord" magazine, May 2007

The Council of Mortgage Lenders has set out clarification on the circumstances in which buy-to-let loans are covered by the Financial Services Authority's mortgage conduct of business rules.

As a general rule, buy-to-let loans do not fall within the definition of 'regulated mortgage contract', and so are not covered by the FSA's mortgage conduct of business rules. However, the CML has set out the following cases where they may come within the definition:

• The loan is secured on the borrower's own home, rather than the property being bought to be let.
• A member of the borrower's immediate family will be living in the property at the time the loan is completed. If the borrower buys the property and tells the lender that no immediate family member is to live in it, and a son or daughter subsequently moves in, it will remain an unregulated mortgage contract. The definition applies at the time the loan is completed, and its status is not affected by subsequent events.

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