Dozens of banks and building societies promised to make the small print on buy-to-let (BTL) mortgages simpler and clearer, in a bid to make the products as transparent and straightforward as more heavily regulated retail mortgages.
The aim is to make borrowers’ obligations clearer, so that BTL customers understand how much they have to pay back, how the instalments work, and where the fees come into the deal.
A total of 31 lenders have signed up so far, representing more than 90 per cent of the market.
The BTL market is increasingly important – there were more than 1.6m such loans outstanding at the end of 2014, compared with just 576,700 a decade earlier.
It comes as over-55s have been given new freedoms to spend their pension pots as they wish, rather than being forced to invest in annuities.
One likely outcome is an increase in retirees putting their cash into buy-to-let properties, in the hope that the assets will provide a healthy return.
Last month, the boss of the Council of Mortgage Lenders, Paul Smee, announced the formation of a taskforce to study borrowing into retirement.
“Lenders know how important it is to have a transparent mortgage market, in which borrowers can have confidence, and where lending policy is both responsible and clearly understood,” said Smee. yesterday.