The Treasury has published proposals which would see second charge and buy to let morgages regulated by the Financial Services Authority.

The plans included in a consultation document also set out proposals to protect borrowers when lenders sell on mortgage books to third parties.

The consultation sets out the details of the proposed legislation and will close on 15 February 2010. Any final measures will be implemented through secondary legislation.

Exchequer secretary Sarah McCarthy-Fry said: "Since the onset of the global financial crisis, the government has worked hard to ensure mortgage borrowers are treated fairly by their banks. Our focus has been to do all we can to make sure people can stay in their homes and to limit repossessions as much as possible.

"But we are aware that this crisis has raised issues around the world about the regulation of the mortgage market. We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market."

The Association of Mortgage Intermediaries, which represents mortgage brokers, backed the proposals.

Robert Sinclair, director of AMI, said: "We welcome the proposals to introduce regulation to aspects of the buy-to-let market. It is right that the proposals will exempt limited companies and focus on individuals who carry out buy to let transactions.

"Broadly, this appears to be codification of existing industry best practice, and should not introduce significant additional costs."

He added: "However, this consultation, combined with the more extensive Mortgage Market Review, proposes wide ranging changes to the market. government and the regulators need to ensure that any reform is implemented in a coordinated and efficient fashion with suitable time periods to allow the industry to adapt."