Sunday 31 October 2004, so called ‘Mortgage Day’, marks the date that the Financial Services Authority (FSA) takes over the statutory regulation of domestic mortgages. From that day, the Mortgage Code will no longer apply and the protections available to consumers under the voluntary mortgage code will end, being replaced by the new FSA rules.
Buy-to-let and commercial mortgages are all non-regulated unless 40% of the property (including the land) is being used as a residence by the borrower or a direct family member. If the investor is purchasing property using a limited company they will also fall into the non-regulated category.
Organisations such the Council of Mortgage Lenders rightly advise consumers to ensure any domestic mortgage adviser is an appointed representative of the FSA. However, property investors using a FSA regulated residential mortgage adviser will be afforded no regulatory cover on buy-to-let or commercial property investment transactions.
David Whittaker, Managing Director of Mortgages for Business comments: “Buy-to-let and commercial mortgage applications almost all fall into the non-regulated category because they are considered business transactions, and are therefore not afforded the cover personal regulated mortgage transactions receive.”
“If investors are looking for peace of mind when transacting property investment mortgages we would urge them to use a National Association of Commercial Finance Brokers (NACFB) member. The NACFB requires all members to follow a strict code of conduct, maintain a professional indemnity policy and has rigorous grievance procedures in place, designed to safeguard the investor and preserve the integrity of the industry.”
