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.