4 Impact Assessment
23. It is expected that the proposal to exempt
buy-to-let lending from regulation will create no extra cost to
industry (or detriment to consumers).[16]
Indeed, without the exemption, the creditors concerned would be
required to introduce expensive systems changes. An independent
assessment estimated the cost of so doing to be £100 million
for one-off transitional arrangements (involving systems, form
changes and staff training) and £500,000 per annum
continuing costs spread over 80 creditors.[17]
The Explanatory Document says:
"Although we are proposing to extend the exemption
to buy-to-let loans of any value, the impact of this will be negligible
as buy-to-let loans of £25,000 or less are few if any in
today's market…Buy-to-let investors will benefit as a consequence
of there being no disruption to the market (either permanent or
temporary) and creditors not passing on to them the costs of any
significant changes through increased charges and product costs".[18]
24. If the proposals in the draft Order are agreed
compliance costs with regard to the giving of statements and notices
of arrears of payments will still arise. These have been estimated
at around £500 million for the industry as a whole.[19]
The proposals would retain such costs at expected levels. However,
if the proposals in the draft Order are not introduced, it is
argued that additional compliance costs of about £26 million
for one-off transitional arrangements and approximately £49
million in continuing costs would be incurred.[20]
The likelihood here is that the ensuing higher product costs would
be borne by consumers. In terms of statements and notices, a further
positive impact of the draft Order being agreed would be:
"…clarity for consumers who will receive
statements and notices in a consistent manner that they understand".[21]
16 ED p5, para14. Back
17
Ibid. Back
18
ED p6, para14. Back
19
ED, p6, para15. Back
20
Ibid. Back
21
Ibid. Back
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