SUP 16 Annex 39B 1Guidance notes for completion of consumer buy-to-let return in SUP 16 Annex 39AD

Outline guidance for firms completing the aggregated ‘consumer buy-to-let’ (CBTL) mortgage return

We expect firms registered by us to carry out CBTL lending to report aggregated data to us on a quarterly basis, with reports scheduled in line with each calendar quarter. We expect firms to report loans, and aspects relating to those loans, that meet the definition of a “consumer buy-to-let mortgage contract”, as defined in article 4 of the Mortgage Credit Directive Order (CBTL credit agreement in the Handbook). We expect firms to submit a nil return if they have no data to report.

Further guidance is provided, below, on what should be reported under each category.

1 Lending

The number of CBTL loans reported should be at account level, rather than property level.

(a) New CBTL advances in the reporting period

This should include new loans for house purchase and remortgage, where the mortgage completes in the reporting period.

(b) Outstanding CBTL loans

This is the amount of total debt at the reporting date, and should comprise the total amount outstanding (after deducting any write-offs but without deduction for any provisions) in respect of:

1. 2(i) the principal of the advance (including any further advances made);

2. 2(ii) interest accrued on the advance (but only up to the reporting date), including any interest suspended; and

3. 2(iii) any other sum which the borrower is obliged to pay the firm and which is due from the borrower, e.g. fees, fines, administration charges, default interest and insurance premiums;

2 Arrears, repossessions and receivers

(a) CBTL loans in arrears of >1.5% of outstanding balance

At the reporting date, the amount of arrears is the difference between:

1. 2(i) the accumulated total amounts of (monthly or other periodic) payments due to be received from the borrower; and

2. 2(ii) the accumulated total amount of payments actually made by the borrower.

Only amounts which are contractually due at the reporting date should be included in 2(a)(i) above. That is:

1. 2(i) include accrued interest only up to the reporting date but not beyond;

2. 2(ii) and only include a proportion of any annual insurance premium if the firm permits such amounts to be paid in periodic instalments. However, if the terms of the loan or the lender’s practice are such as to permit insurance premiums to be added to the loan principal then do not treat such amounts as contractually due;

3. 2(iii) similarly, where 'any other sum' has been added to the loan, only include such proportions as are contractually due (e.g. if it is the practice in particular circumstances to add the sum/charge to the loan and require repayment over the residual term of the loan);

4. 2(iv) in assessing 'payments due' when a borrower has a flexible loan, it is important to apply the contractual terms of the loan: for example, payment holidays which satisfy the terms of the loan should not be treated as giving rise to an arrears position.

Where a firm makes a temporary 'concession' to a borrower (i.e. an agreement with the borrower whereby monthly payments are either suspended or less than they would be on a fully commercial basis) for a period, the amounts included in 2(a)(i) are those contractually due (and at commercial rates of interest). Hence the borrower will continue to be in arrears and the level of arrears will in fact continue to increase until such time as he is able fully to service the debt outstanding.

Where the terms of the loan do not require payment of interest (or capital) until a stated date or until redemption or until certain conditions are triggered, as for example in the case of certain building finance loans, then the loan is not in arrears until such time as contractual repayments fall due.

Accounts under a Receiver’s control should be reported as in arrears where this is the case.

(b) CBTL repossessions

This should include each property secured by a CBTL mortgage taken into possession (through any method e.g. voluntary surrender, court order etc.) in the reporting period. It should not include all possession stock remaining unsold in the period. This should not include where a property is under the control of a receiver, but should include where a receiver has exercised power of sale.

(c) Number of Receiver appointments on CBTL

This should include where, within the reporting period, a Receiver has been appointed on a property secured by a CBTL mortgage, including those where the property is no longer under control of a Receiver.

(d) Number of CBTL properties under the control of a Receiver

This should include where, at the end of the reporting period, the Receiver is managing/overseeing a property secured by a CBTL mortgage.

3 Complaints

A complaint should be reported where the complaint concerns CBTL activity. Firms already required to complete the complaints return set out in DISP 1 Annex 1 should continue to do so alongside the CBTL aggregated return.