Cameron veto may mean buy to let regulation by EU

Cameron veto may mean buy to let regulation by EU

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Cameron veto may mean buy to let regulation by EU

Mortgage lenders are quietly furious behind the scenes that Prime Minister David Cameron’s Euro treaty veto may have scuppered their fight to block the regulation of buy to let loans.

As the dust settles on the UK’s lonely position standing in the kitchen looking on at the Eurozone party, buy to let could be one of the victims.

Lobbyists are putting a brave face on their position and hope that the veto stance will not damage their case in the corridors of power in Brussels.

Buy to let regulation is threatened under the draft European Union mortgage directive. Under the directive, buy to let becomes a consumer loan and subject to the same underwriting as a residential mortgage.

Lenders fear this will mean landlords will have to show they can afford to pay the loans on property investments from their earnings rather than projections based on the property’s rent.

Effectively, growth in buy to let would stop as few landlords could afford to finance their own homes and rental properties from their salaries. The rule would also prevent existing landlords from remortgaging.

The fight to exclude buy to let and bridging loans from the directive is led by the Association Of Mortgage Intermediaries, representing brokers, the Council of Mortgage Lenders and the Building Societies Association.

“The EU veto may make it more difficult for the UK to lobby on the European mortgage directive,” said a CML spokesman. “Our arguments, specifically against buy-to-let being regulated through the directive remain robust.”

Meanwhile, despite the diplomatic bluster in front of the cameras, the fate of the new Euro treaty to bolster the Euro and wobbly government finances in many European countries may hang in the balance.

Several countries have warned that they may face problems ratifying a new treaty through their parliaments if the wording about central control of budgets is not watered down.

The cracks in the new-found European unity are showing before a word of the new treaty has been drafted.

Stock markets in France and Germany dropped on the news, while the FTSE bucked the trend and strengthened.



Comments

7 years ago

Oh dear it is not looking good is it.
Effectively this situation is causing the same situation as 'planning blight'.
This is going to possibly cause an enormous housing headache and politically it is going to give the govt a migraine!?
Election chances; not looking good presently with all those possibly bankrupt landlords and homeless tenants.

Mark Alexander

7 years ago

Fear not Paul, the brains in the mortgage market are already working on their "work arounds". This might involve lending to Limited Companies with the protection of personal guarantees secured by first charge over buy to let properties held in the personal names of landlords. Loans to companies will not be affected by the proposed EU legislation but the CGT cost of transferring properties that are already owned into companies could be enourmous, hence this proposed structure which would avoid the sale of any asetts. The structure is combersome though so it's definitely not the route of choice for lenders. I do keep my ear to the ground and network with the movers and shakers in the industry, hence my ability to share these types of secrets. Obviously I can't name names in terms of which lenders are coming up with these schemes but rest assured my friend, buy to let doomsday will not arrive, despite what the House Price Crash posters may think. If it really was all doom and gloom do you think the likes of Santander would have entered the buy to let market recently?

7 years ago

Heres hoping what you say comes to pass; clearly it is in everybodies interest to ensure there is a vibrant PRS; which this EU regulation would; if enforced effectively destroy.
Possibly a business opportunity for you setting up private companies for landlords to achieve these work arounds.

7 years ago

What about Sharia compliant mortgages; I appreciate that is well off the wall but I think such thinking is required to beat these EU bods.
In warefare they call it asymetric don't they?

Mark Alexander

7 years ago

There is an opportunity in every difficulty and a difficulty in every opportunity Paul. Let's wait and see what happens, plan for the worst, hope for the best.

7 years ago

Nice one mark, keep it up. Save us from the euro twits!

Mark Alexander

7 years ago

Thanks Shaon and thanks for commenting, if you would like to add a picture to your comments there is an option to so by going to the Recent Comments tab on the navigation bar in our website Header.

7 years ago

There are flaws in the facts and the thinking in this article.
Fact: There is NOT going to be a new treaty - that was exactly what Cameron vetoed. So all the lemmings that want to rush over a cliff at the Germans' bidding will have to make a new arrangement outside the EU Treaty
Thinking: yours is that everything else will go on as before EXCEPT that all the other EU members will take revenge on the UK in other unrelated matters.
Probabilities:
1. If the new arrangement does go ahead - unlikely because it will take too long and the euro is sinking fast - then the revenge scenario is unlikely because it would increase the risk of UK leaving the EU altogether and it cannot survive financially without our money.
2. If the new arrangement does go ahead then, revenge or not, it would be untenable for UK to remain in EU and public opinion will finally revolt - and then we will be free of such manic regulations anyway.

SO be positive, don't whine about Cameron upsetting the foreigners and say instead "The Only Way is OUT"

Michael Holmes

7 years ago

The problem is the EU, not the mortgage lenders reaction to it., When is the penny going to drop, we have to get out of this ridiculous organisation asap. We then won't get all these stupid directives thrust down our throats all the time.

7 years ago

I agree with geeting out.
The principal underlying reason for the EU was to tie us up as nation states so much that we would never go to war with eachother again.
Such that no one ever thought that we would see a war on the European mainland again and certainly not 'Final Solutions' etc................................The Balkans; ethnic cleansing etc, etc etc!!
The EU started with the Coal and Steel pact btween France and Germany in the 50's .
It was a nice idea whilst it lasted but as a nation we really need to have a'Worild' view rather than a Eurocentic one.
Britain got to be a great trading nation by having a powerful army and navy.
Now you don't do it this way, you provide goods and services and the endeavour to market those services to the GLOBAL ECONOMY; not just Europe..
Trading with ALL parts of the world is the ONLY way the UK economy will prosper.
People seem to have forgotten that old homily, so often esposed in the 50's and 60's; EXPORT OR DIE
This remains more truer than it ever was; so our horizons must increase to incorporaste the whole world and not just little europe.
World economic power is shifting inexcorably eastwards; it is time the UK woke up to this new paradigm or we as a country will find ourselves more impoverished as times go on.

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