Buy to Let Mortgages will be more regulated to meet EU Rules

Buy to Let Mortgages will be more regulated to meet EU Rules

The UK Treasury has recently announced that they are to bring in new rules to regulate Buy to Let mortgages. These rules are set out in the EU Mortgage Credit Directive. It sets out Europe-wide standards in order that consumers are protected when taking out loans on a Buy to Let basis.

Does this affect you?

This is really aimed at individual “consumers” rather than when lending for business purposes.
The Council of Mortgage lenders (CML) aren’t too happy about this new ruling as it affects the acts of a private individual when considering letting a property out in order to buy another.
The CML offered the following explanation about which buy-to-let loans will be regulated:
“The Treasury considers that, to meet the requirements of the Directive, it is necessary to put a regulatory framework in place for those cases where borrowers are not making an active decision to acquire a property to become a landlord, and where they do not seem to be acting in a business capacity (“consumer” buy-to-let). Examples might include cases where the property has been inherited, or previously lived in by the borrower, but the borrower is unable to sell it and so lets it instead. The proposed new regulation will only apply to relevant new loans (not existing loans), and not until March 2016.”
We aren’t really sure that this will make much difference to the mortgage market as much of Europe is considerably less regulated than the UK.
This new rule won’t come into force until March 2016.

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