Cameron veto may mean buy to let regulation by EU

by News Team

20:45 PM, 14th December 2011
About 9 years ago

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.


9:36 AM, 20th December 2011
About 9 years ago

As an offshoot of this, a pertinent question comes to mind --- If someone only owned LTV property and was expecting to buy their own residence later in life (funded by employment even) would the residential mortgage lender refuse to view the existing LTVs as covered by their rents? So in fact a person would never normally be able to buy their own/switch residence on a loan without selling all their LTVs first ??
On a more general note, wouldn't it be ironic if the UK was the most fortunate country in being safely 'euorolocked' out of all the troubles and then ended up inadvertently by a trail of events being worse off than the rest of Europe.

Mark Alexander

9:40 AM, 20th December 2011
About 9 years ago

Hi Gareth, I think I follow what you are saying. Did you meam BTL (as in Buy To Let) as opposed to LTV (Loan to Value)? All these abbreviations do us no favours do they?

9:48 AM, 20th December 2011
About 9 years ago

Yes ! I probably did - feels early still!


12:34 PM, 20th December 2011
About 9 years ago

Gareth, it virtually already happens! My wife and I were separated and I was living in rented accommodation whilst she was living in our mortgaged matrimonial home. Last year we divorced, paid off the residential mortgage and she had the house in settlement. Because of injuries sustained at work and my inability to guarantee future employment I decided that I needed some other form of long-term income so built up a small portfolio of 6 BTL mortgaged properties. At a young age of 48 and after working for the same employer for over 31 years I was gently required to retire on pension (long story and ill-health retirement with its enhancements was not an option but if the country wasn’t in the midst of financial crisis I would have been able to carry on in my position for a number more years)!
I wanted to get back on the residential mortgage ladder but suddenly found that most lenders would not consider me as I had all this good BTL debt. This was despite having more than enough loan cover on each property plus a small net income from each, as well as a guaranteed pension. I did find a few options and after a lot of frustration I have now got myself a mortgage, but if we don’t get these proposed directives put to bed then I agree with an earlier post that the private rental sector, which let’s face it accounts for a large proportion of housing stock in Britain, could suddenly disappear and cause the government even more headache and housing cost in an area that they still haven’t got to grips with.
Let’s hope that Mark’s ear-to-the-ground info is being worked at in the background as this for me and no doubt for many other landlords is meant to be a long-term investment plan.
From what I understand of the current EU stance that Cameron has taken I fully agree with his actions and on the balance of likely scenarios if the whole thing does collapse I would go down the route of getting out of Europe altogether sooner rather than later.

16:17 PM, 11th September 2012
About 9 years ago

Fact is that the UK is in the EU and politics is the art of the possible.
This proposed buy to let legislation cannot be enacted without a 72%plus vote
under qualified majority voting system. In effect this means we must have friends within
the Council of Ministers and Cameron's silly performance means that our friends
are very few. This legistlation if it goes through will be costly to both landlord and tenant alike.

14:28 PM, 18th February 2013
About 8 years ago

Fact is we are in the European Union and politics is the art of the possible.
Under the qualified voting system UK has 8.5% of the vote which means we must
have "friends" to make sure that this buy to let legislation is not enacted.
Cameron's actions of first of all leaving by the main EPP political group has not helped
and his recent silly veto has left us quite isolated when we need help.
This is simply amazing when you consider that out of 27 there are at least 23
countries with centre right governments.!
Should this legislation come about it will be a very poor day for landlords and tenants alike and a disaster for UK diplomacy.

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