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

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

14:24 PM, 19th November 2011, About 10 years ago 100

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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.
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Comments

by

17:14 PM, 27th November 2011, About 10 years ago

Ian, as I understand it all rental incomes will be discounted, not just the projected income from the property the mortgage is being applied for. It seems that you have a different understanding and if so, please can you direct me toward some official document that makes it clearer?

If my understanding is correct then it will be a huge limitation in what us full-time landlords can do (and there are a great many full time landlords). As those of us in this boat will have numerous properties then YES it will affect an enormous portion of the BTL marketplace. Also, those that are aspiring to become full time Landlords will now have their wings clipped severely.

This proposed legislation will be biased against the professional, full time and EXPERIENCED landlords that know their business, have likely lived through many years of the good and bad times, and therefore are not 'high risk'.

A full time Landlord often has the ability and need to ensure the properties are kept to high standard as they rely upon their reputation with the market and their local Councils. They are NOT usually high risk takers as you suggest, they are most often the 'good guys' in private sector housing. They contribute greatly to the housing needs of the country and therefore this move will, I believe, be highly detrimental to future of the supply of housing stock to the rental market.

However, if as you suggest, that the ruling will only apply to the projected rental income that the property where the mortgage is applied for, then it's a lot of fuss about nothing.

Unfortunately, legislation (particularly in the housing sector) seems to often be applied without the basics of commons sense. I would therefore think it likely that all rental income will be discounted, and that being the case it is possible that the existing mortgage outgoings will not. Therefore it will be impossible to obtain mortgages for new properties, and indeed that may also apply to working individuals like yourself who could probably not cover a fourth mortgage on existing income levels.

I would add that if the lenders are worried then we should be too!

by Mark Alexander

17:27 PM, 27th November 2011, About 10 years ago

Hi John

The lenders are worried!

See this article about John Heron, MD of Paragon Mortgages trip to Brussels when he first heard about this http://www.property118.com/index.php/tag/eu-mortgage-directive/

by

17:41 PM, 27th November 2011, About 10 years ago

You call us trolls and we call you societies parasites.

The strange reason first time buyers don't love you is you buy up all first time buyer properties. You force prices up so we are priced and are forced to rent the properties we once could buy.

You are also an economic liability, how many banks have had to merge and be bailed out by the tax payer because of the buy to let loan books?

How many savers are being punished to give you ultra low interest rates which in return you charge us record high rents?

by Mark Alexander

17:49 PM, 27th November 2011, About 10 years ago

The strange reason first time buyers don’t love you is you buy up all first time buyer properties. You force prices up so we are priced and are forced to rent the properties we once could buy. Sorry, I don't agree. Most tenants choose not to buy or are not in a position to do so. Think LHA tenants, students etc. Then there are the people who don't want to buy for a variety of reasons including job stability, new relationship, preference for no committment etc.

You are also an economic liability, how many banks have had to merge and be bailed out by the tax payer because of the buy to let loan books? Err, NONE? Q) Why do bank prefer to lend to BTL landlords? A higher margins, lower default rates than FTB mortgages.

How many savers are being punished to give you ultra low interest rates which in return you charge us record high rents? Please see responses from many other posters.

by

17:50 PM, 27th November 2011, About 10 years ago

I went to university just before the buy to let bubble took off. Rents were cheap back then and landlords were on repayment mortgages or owned their properties. They weren't interested in capital growth or gearing.

Nowadays buy to let treats students like a commodity and rents have gone sky high.

Personally I think students were better without buy to let.

by

18:04 PM, 27th November 2011, About 10 years ago

Extraordinary! I don't think I have come across a view so bitter and distorted before now.

For the record I am a portfolio Landlord and have NEVER bought a FTB type or property.

What I'm curious to know is if you think the same about everything. Are you concerned about food prices because other people are buying it and forcing prices up?

What about cars? Electricity? Stocks & shares?? What about clothes?

May I suggest that if you are truly struggling to buy a property, then go and learn how to do it.

Here's a really controversial view for you....

I am of the opinion that for most people in this country (I did say 'most' and not 'all'), poverty is a choice. The reason I say this is that there are countless examples of people that have made the conscious decision to do something 'about their lot' and instead of whining, they get on and change their life round. So, if you really are struggling to buy a house, get educated. Really, I mean that with good intent. Stop your moaning and take action.

As a FTB there are options open to you that are not open to Landlords so why not take advantage of them? Of are there other reasons that you would not be given a mortgage???

by Mark Alexander

18:08 PM, 27th November 2011, About 10 years ago

Perhaps that's because the balance between supply of properties and demand was better back then? If supply is restricted even further, what do you think will happen to rents then? The only way to stabilise rents and to give all students the ability to avoid having to rent low grade properties is to increase supply, not to reduce it.

by Mary Latham

18:17 PM, 27th November 2011, About 10 years ago

I let to students in those pre BtL days and I am pleased that you had a good experience renting but I have to say that the changes in attitude and rising costs of rents has more to do with the increase in costs for landlords than it has to do with how they borrow their money. Student properties are now HMO's and many are subject to licensing, the licence fee alone is £800 per property in Birmingham and more elsewhere. Then there are the costs of interlinked smoke alarms, fire doors etc. Student these days expect very high standards and they want double bedrooms ensuite, internet, plasma TV's, top of the range kitchens and bathrooms etc. The students properties that comand high rents in my area are 4 star hotel standard. There are some more modest student homes and these are let at a more modest rent but they are much harder to let. The University of Birmingham will not allow a landlords who is not MLAS accredited to advertise and the students guild tell their students not to let from a non accredited landlord. This means that there is a robust complaints procedure and landlords must treat their tenants with respect. In the first five years of the scheme thousands of properties have been let by accredited landlords and just over 30 complaints have been investigated. Some landlords have lost their accreditation following a serious complaint.

The huge growth in demand for good quality student accommodation has driven rents up and a decrease in supply would drive them up futher. Property supply depends on money supply in all markets.

by Svetlana Alexander

18:29 PM, 27th November 2011, About 10 years ago

@Brit1234 This might surprise you but I am not a landlord. I am not a UK homeowner either. I have dual British and Russian Nationality. I am British educated to Masters Degree level and I have a good job. Renting is a choice, I like the flexibility. My degree is economics based. A basic rule of economics is scarcity. If demand is greater than supply prices rise. Be careful what you wish for.

by

23:01 PM, 27th November 2011, About 10 years ago

So you don't agree buy to let pushed up the prices of traditional first time buyer properties. I take it then you invested in 3-4 bedroom houses and not 1-2 bed flat/houses then?

I think your find that buy to let has the higher rate of repossessions than ftbs. Just watch the treasury select committees to get info on that. The reason buy to let mortgages have higher interest rates is they have higher risk. If first time buyers were more of a risk their costs would be clearly higher.

As for the rest have you not heard of HBOS, Royal Bank of Scotland, Alliance and Leicester, Bradford and Bingley and Bank of Ireland.


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