EU Trying To Kill Buy To Let – sign the petition to STOP it now.

by Mark Alexander

14:24 PM, 19th November 2011
About 9 years ago

EU Trying To Kill Buy To Let – sign the petition to STOP it now.

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EU Trying To Kill Buy To Let – sign the petition to STOP it now.

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.

DO NOT LET THIS HAPPENsign this government petition and use the share buttons below to encourage others to sign it too.


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 largest online property investor directory.
Mark’s experiences and strategies as a landlord are shared here

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Comments

9:12 AM, 24th November 2011
About 9 years ago

I think the point relating to 'trolls' is that if people have a point to make it's better to do what you have done and openly state that rather than hide behind techonology games. I agree that homes would ideally be affordable under reasonable circumstances. I am interested you equate ownership with personal liberty. As a homeowner (not a landlord) I am all too aware of the sacrifces that required and the lack of security it provides.
We have come some way from a time when owning a home was considered a privilege rather than a right. But equally do people have the right to overseas holidays, satellite TV and nights out on the town whilst the economy shifts so that other tax payers support home ownership for new buyers? I don't think rights and liberties have any place in this debate. The basic human right is to have a secure roof over one's head, and to be able to enjoy that peacefully. The Private Rented Sector has a place in providing that to many families for whom there is no other provision. It always has and tenant law provides for a great deal more protection than has existed in the past.

16:33 PM, 24th November 2011
About 9 years ago

the problem is that the private rental sector is full of parasites.I own a home and have recently had the unfortunate experience of having to rent via an estate agents due to working a long way from home.

private rental is a nightmare.fees,fees and more paperwork and fees.Stupid credit checks.I dont want credit,in fact im paying in advance!

And as for who subsidises who...uk savers are currently being sacrificed.interest rates are low and pensioners are suffering.Why should BTL types be subsidised with low interest rates by everybody else?

-and fundamentally owning a property should be a viable proposition for our young.All the young people are know with any sense are going to leave as they are not prepared to spend their working lives subsidising the non productive sectors of the economy.Im 41 and thankfully had the opportunity to buy a house.What right do we have to hoard scarce resources and deny that to the next generation for selfish profit?

Mark Alexander

16:04 PM, 25th November 2011
About 9 years ago

I have just posted a related Blog on Archant's Homes24 website. Please see http://blog.homes24.co.uk/general-property/landlords/2011/11/proposed-eu-mortgage-rules-could-kill-buy-to-let/

18:30 PM, 25th November 2011
About 9 years ago

Buy to let is a parasite on society. As a first time buyer I welcome this EU legislation. The over gearing on buy to let properties not only puts our banks at risk but also our economy. These get rich quick property cowboys need to be curtailed.

Why should buy to let landlords buy up all first timer homes with unfair tax advantages and little own money put down.

8:35 AM, 26th November 2011
About 9 years ago

Stop the EU on stopping Buy to Let mortgages

We are ruled far too much by Europe - Look at the state ofm it Now

8:46 AM, 26th November 2011
About 9 years ago

so you think BTL is a parasite then explain when councils ar not building property and people without steady jobs set regular income or whos job moves them alot where do they live. Or is it you only want big commercial blue chip companies to own rental property then seen what the rents do. Tell europe ( who by the way has enough problems on their own to sort our first) to stick it up their euro

Svetlana Alexander

9:03 AM, 26th November 2011
About 9 years ago

Where will students live if there are less buy to let landlords and how much will rents go up if there is a shortage of property to let? If supply of property is short and demand is so high what will be the incentive for landlords to maintain their properties? The supply of quality accommodation could also fall drastically. All students should sign this petition too.

9:04 AM, 26th November 2011
About 9 years ago

This issue needs careful thought. I have a second property which I manage as a holiday let. I made the investment because I'm self employed and commercial pensions are so poor. I funded it with a deposit from my deceased father's estate and by extending my existing mortgage which is based on an assessment of our household income. If I had a long term tenant they would be secure.

The flat below us was owned by a man who'd got an interest only BtL mortgage and who was seriously overstretched. We found out that he was a serial liar (we bought our flat from him) and he was using our flat as collateral for further loans even though he no longer owned it. We had the Inland Revenue staking out the place and all sorts of letters from creditors and banks as he was using our address to scam them from. I finally caught up with him and put a stop to it (and told the IR, banks and Police).

And what happened to the nice older couple in his flat; the ones who'd never missed a payment and who looked after the garden...? Kicked out at 4 weeks notice. His antics not only affected our credit rating but those of the old couple. We sorted ours out but it made it very hard for them to rent somewhere new.

I don't know what the answer is but the legislation needs to reflect the honest needs of people like myself who want to invest whilst making sure that fraudulent scum (sorry, I'm still angry about what he did) like ********* (I'm so tempted to name him) are prevented from ruining people's lives.

** MODERATORS COMMENTS **
I would like to publicly apologise to this poster for an earlier misunderstanding. An offensive reply to which he complained about has been removed and this poster has provided a further offline account of his experiences which are noted in italics below.

4 weeks notice was illegal but the guy in question didn’t do anything legally. The older couple (Brian is now dead, so I can name him) didn’t take legal advice or our advice (my wife is a Chartered Surveyor) which was to stay put. Because they were decent people the went, carrying the credit rating of their crooked landlord with them as this (for some bizarre reason attaches to properties as well as people).

I don’t want to stop people investing in property but I do want some of the heat taken out of the financing of it by reckless borrowing based on falsified income claims. I want realistic property prices and rents which reflect real people’s incomes be they landlord, tenant or private owner.

Part of the reason our economy is in such a mess is because we all have to spend such a high proportion of our income on housing ourselves. This issue needs to be addressed. If you don’t realise that there are good landlords and bad ones then you are naive. If you don’t understand the difference between prudent ways of investing money and irresponsible ones then I suggest you are not the right person to listen to regarding this legislation.

9:09 AM, 26th November 2011
About 9 years ago

i am a regular earner from the rented property market.not on a big scale but regular and we all want regular income and reliable .unlike the decisions made by the eu recently with greece and italy as fine examples of their dithering .they are very quickly loosing credibility and i believe we would all be better off with ted heaths original plan for a common market

Tony Atkins

9:34 AM, 26th November 2011
About 9 years ago

Thank you Teena for a levelheaded response. I too am highly sceptical that owning property is part of personal liberty: I would argue it often makes you less free, what with exposure to all the maintenance costs, the high cost of moving and remortgaging, the exposure to variable interest rates, etc.

Arguably people in Britain should be less obsessed with property ownership - they seem to do OK in Switzerland and Germany where most people rent - and one has to ask whether people's perspective is skewed because of the the tax-free capital gains that homeowners are given. If the government restored CGT on home ownership, as used to apply before 1965, perhaps the zealots on HousePriceCrash as well as the Daily Mail would obsess less about people's "right" to own a home, which curiously never seems to include the many millions of people living on benefits or in state-subsidised social housing.

As for BTL landlords being "parasites", I just don't get the argument. Are commercial landlords who charge rent on business premises "parasites"? If not, if they then start renting out an apartment above a retail unit to private individuals, do they suddenly become parasites then? If a bank lends you money and charges you interest, which is the same thing as rent (and more expensive - most landlords only get 6% gross, from which all their costs have to be deducted) , is that "parasitic"? If a supermarket that invests its capital and employs people to sell food also a parasite, because it is making a profit by selling something that people need in order to survive? Why is housing so different from any other kind of human enterprise where people expect a return on their investment?

In fact, most private landlords are doing tenants a favour: they are investing their capital to provide living accommodation on which they make almost no profit - most landlords barely break even on running costs, and would be better off with their money on cash deposit - so all the tenant is doing is covering the mortgage interest and living off the landlord's embedded capital for free. Tenants moan about "paying someone else's mortgage", but the vast majority are not doing that at all: all they are doing is covering the mortgage interest, which they would have to do anyway if they owned a house themselves. Once you take the need to make capital repayments and the maintenance cost of property ownership, renting is clearly the much more affordable option.

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