According to the rules of Mortgage Conduct of Business, lenders must have evidence to demonstrate that the firm has taken into account the customer’s ability to repay - but buy to let is unregulated and therefore not subject to the same checks because, in most cases, lenders are more interested in the rent a property can achieve and not the income of the borrower.
Precise have said that, in the event of having reason to believe that a BTL application is actually a disguised residential applicationm they "will not refund the Assessment Fee" and the fee will be kept to cover additional costs of processing.
They also made clear that they will also be reporting brokers who repeatedly attempt to disguise residential cases as BTL to their Principal or the FCA as well as removing them from the panel. MD Alan Cleary also commented that all lenders flag these cases on SIRA or Hunter systems, so brokers and customers who do this are "crazy" and face being removed from all main lender panels.
An Appeals Process has been put in place to protect customers and brokers from mistakes.
Managing Director of Precise, Alan Cleary, said:
"A large minority of brokers are playing fast and loose with their FCA authorisations. Whilst this is not a new issue, all lenders are talking about the current phenomenon of residential cases being disguised as BTLs in order to circumvent the more rigorous affordability rules of regulated mortgage contracts.
"In order to protect consumers and honest brokers we are taking action against this practice. Remember a customer who does this has no protection from the regulator. Quite frankly it is also a complete waste of our time as we end up wasting resource that could be processing genuine cases."
