Accidental Landlord Buy to Let mortgages are now to be regulatedMake Text Bigger
The Government has changed its mind about regulating Accidental Landlord Buy to Let mortgages in a decision to now comply with the EU mortgage credit directive being brought into law March 2016.
The Treasury has stated that accidental landlords who did not make the conscious decision to purchase a property to rent it out were not acting in a business capacity, and must therefore be regulated.
This new regulation would capture properties for example that have been inherited or where a borrower has had to move and not been able to sell. Exactly how a lender will make sure it knows a property was an accidental Buy to Let in all circumstances is as yet unclear.
Currently the only Buy to Let loans that are considered to be regulated are where the borrower has an intention to live in the property at some point in the future or has a close relative living in the property.
It has been confirmed that where a property is purchased with the intention of letting it out, and therefore the consumer is acting in a business capacity, then the Buy to Let mortgage will remain unregulated as it is now.
Paul Smee, the Council of Mortgage Lenders director general said, “With the mortgage market review out of the way, we now enter round two of regulatory change as a result of the European Mortgage Directive.
“We are hopeful that most of the impact should be modest, as much of it was anticipated and helpfully built in to the new rules in the first place.
“It is frustrating though that, despite earlier assurances, the buy-to-let position turns out not to have been adequately resolved, resulting in a new proposal for regulating part of the buy-to-let mortgage market.
“The regulatory regime now being proposed is based not on any evidence of a need for additional consumer protection, but purely on ensuring that the European legal requirements are met.”
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