The British Property Federation (BPF) approached the government to urge regulation of buy-to-let syndicates, believing that the DTI’s current policy of closing offending syndicates is inadequate and does not fully protect consumers or the sector’s reputation.
The BPF wants a more hands-on approach from the FSA who insists it is unable to take action unless powers are granted by the government. However, the Treasury, which believes that buy-to-let is the concern of sophisticated investors, said that further regulation is unnecessary.
Robin Gordon-Walker, spokesman at the FSA, reiterated that buy-to-let property syndicates do not fall under the FSA’s control. He said: “Brokers are aware that this kind of investment can’t be regulated by the FSA.
“We regulate collective investment schemes but buy-to-let is excluded from regulation and any change in that must come from the government.”
But brokers are annoyed that no one is taking responsibility. Mark Alexander, senior partner at The Money Centre, said: “Someone must take responsibility for companies wrongly taking people’s money.
“We see ridiculous offerings on a regular basis and would like to know who to report them to. If no one takes responsibility this will continue but with companies being put out of business it will hopefully ensure any new syndicates are transparent with the services they offer for their fees.”
Brian Murphy, head of lending at the Mortgage Advice Bureau, said that if no one accepts responsibility for the regulation, it may fall to lenders to ensure they are dealing with authorised companies.
He said: “The FSA and the Treasury both obviously have a position on the matter. Michael Bolton of BM Solutions made a point that perhaps lenders should only deal with authorised companies and I think this is a good starting point.”
