FSA: Buy to let mortgages may have become the new 'self-cert'

The Financial Services Authority (FSA) has accused intermediaries of abusing buy-to-let mortgages by providing loans for ordinary residential buyers, in a move which may affect buy to let landlords.

In its latest newsletter, the authority's manager of retail intermediaries and mortgage sector David Geale suggested that buy-to-let mortgages may have become the "new self-cert".

He raised concerns that intermediaries may be able to use the system to bypass the stringent income and affordability checks that are required for residential regulated mortgages.

"This is particularly the case where lenders are offering buy-to-let products to first-time buyers and where the affordability test is based on projected rental income only," said Mr Geale.

He went on to say that lenders with less robust systems and controls could find themselves exploited, in an issue that could also have a negative impact on property owners who act as genuine landlords.

It follows the announcement by planning minister Greg Clark this week that the government may remove red tape to make it easier for empty buildings to be transformed into new commercial properties.