Nearly 3,000 Sign Up For Petition Against Buy to Let Mortgage Laws
Nearly 3,000 people have signed an online government petition against the regulation of buy to let mortgages under new European laws.
To be discussed in the House of Commons, petitions need to accrue 100,000 signatories. The petition is open until November next year.
Under the proposed European Union mortgage directive being discussed in Brussels, buy to let landlords will face the same mortgage rules as other homebuyers.
This shifts buy to let lending from an investment into mainstream borrowing.
The key change will be considering mortgages on affordability instead of projected rental income.
Banks and building societies will have to base their lending decisions on a landlord’s personal income with checks that disposable income after paying living costs and other bills leaves enough cash to pay the buy to let loan.
The proposal is a major change for the UK but will have little or no effect on the rest of Europe, which has much smaller property investment market.
Lenders and brokers are protesting against the directive on the grounds of the cost of implementing the proposals.
The draft directive goes before the European Parliament again early in January for a vote on more than a thousand amendments tagged to the legislation by EU committees.
Once the amendments are resolved, the final vote is expected before Easter with implementation in 2013-14.
The mortgage directive will also affect remortgaging existing buy to let lending as landlords will come under the same affordability rules, but will have no affect if a property investor has no intention of buying or refinancing.
“This petition is to express the strength of feeling and possible effects of such regulation, to urge the government to prevent this action to protect both British business and individuals’ rights,” says the government petition web page.
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2:24 PM, 11th September 2012, About 14 years ago
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Mark Alexander wrote, in response to brit1664:
I have liked your post because I think it might inspire inspire more
landlords to share this news and to get more signatures.
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2:50 PM, 11th September 2012, About 14 years ago
You have I’m afraid got it wrong.Landlords who are geared tend to have at least 25% of equity in each property as that is what they had to put into the property purchase aswell as requiring a mortgage.
That is about the same as a residential occupier.
However prices have reduced since 2005 and those holding mortgages taken out til recently will be sitting on negative equity in addition to residential occupiers.
Providing interest rates remain low; which they will and rental demand remains high; which it will there is no possibility of landlords causing a risk to the banks; or rather no more risk than a residential purchaser over the past 7 years.
Of couse if interest rates rise then residential occupiers will be more of a risk to banks.
Landlords only become a risk when the mortgage interest is more than incoming rent.
If we get to that stage there would be a financial armaggedon for the banks.
Do you seriously think the government is going to allow that to happen.
No they will carry on printing money as otherwise they will have to give even more money to the banks to keep them capitalised at the ratio the govt wants.
Politically the govt does not need or want a house price crash; remember there is an election coming up soon.
I also think you know nothing about EU tenant rights.
Did you know for example that when you rent in Germany you have to supply the kitchen etc.
Yes you have long leases but believe me the upfront costs to become a tenant in europe are something that tenants in the UK would not want or could afford.
Therefore the EU regulation will just make renting more expensive; particularly inlight of new restrictions on residential borrowing.
There will more prospective tenants chasing fewer and fewer properties; what effect do you think that will have on rents?
Maybe increasing!!?