The buy to let market will grind to a halt if EU proposals to change the way lenders hand out mortgages to landlords are approved, claim experts. Do not let this happen – sign the petition linked below.
The new rules will stop landlords buying new property to rent and restrict mortgage lending that will shrink the number of buyers and push house prices down.
This could put landlords and homeowners in to negative equity that would make selling homes impossible.
This bleak picture of the UK housing market of the future could become a reality as soon as 2013 if European MPs vote in favour of draft mortgage regulations that are aimed at pulling the UK market in line with the rest of the EU.
But British lenders say that buy to let should stay outside the directive because the lending is for business investment rather than for personal homes.
If buy to let is included in the new rules, lenders will have to underwrite mortgages on affordability rather than projected rental income.
For landlords this means they would have to show lenders they could afford to pay their buy to let mortgages from the rest of their income.
The Building Societies Association has slammed the move, with Paul Broadhead, head of mortgage policy, saying: “If the EU goes down this route lenders could be forced to change the way they underwrite buy-to-let mortgages. In the worst case, people wouldn’t have enough money to finance their buy-to-let mortgages and the sector could potentially stop overnight.
“Three quarters of these buy-to-let landlords are individuals, couples and families and if they cannot remortgage their properties they will have to sell, creating an influx of property on to the market and potentially reducing prices.”
The EU draft directive is set to be voted on by MEPs early next year.
Ed Mead, of the Association of Residential Letting Agents, said: “Potential EU legislation might drive many buy to let landlords away from what is a vital part of UK housing provision.
“This must be viewed with caution. Our government ought to be wary of taking a lead from the EU here and encourage informed investment into this sector with tax breaks, not lumping buy-to-let in with those residential purchasers who need all the protection they can get.
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Mark and his family have been investing in property since 1989, initially in the Norwich area but more recently across the length and breadth of England. Mark created Property118.com as a social network for landlords with a vision of becoming the UK’s largest online property investor directory.
Mark’s experiences and strategies as a landlord are shared here
About Mark Alexander
Mark and his family have been investing in property since 1989, initially in the Norwich area but more recently across the length and breadth of England. Mark created Property118.com as a social network for landlords with a vision of becoming the UK's best respected online property community. Mark is also a freelance internet marketing consultant to law firms Email - email@example.com