A new EU directive on mortgages could kill off UK buy-to-let mortgages as we know them, say concerned critics.
And that could have serious implications for landlords and the private rental sector.
The directive would mean that rental income could not be taken into account by lenders. Instead, they would apply the normal affordability tests to all mortgages – ie, amount of deposit and earnings.
A very good explanation is here (paste the link into your browser if it is not showing live).
https://tinyurl.com/bog37gr
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Comments
I have just signed the petition, and recommend you do the same. Am posting on Linkedin landlord forums.
This is so disastrous and would completely blow a hole in Government housing policy that it will never be made law.
If it was, there is a possible solution, which is to put your units into a limited company. Rules will presumably not apply to companies. Company can service debt through rent as before.
For individual landlords, the borrowing ratio would ruin BTL. If you can only borrow, say, 4 times your income, and the income is rent at say 8%, that means you could only get 32% LTV instead of the 70%+ on offer now. What would therefore inexorably happen would be a huge shortage of supply which would drive rents up. If rents were 16%, then per the above calculation, 70% LTV would still apply.