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Written by rosalind renshaw

Concerns are mounting over the growing likelihood of EU regulation of buy-to-let mortgages in the UK, with some landlords being urged to remortgage long-term sooner rather than later to avoid possible difficulties later.

There are fears that regulation could restrict mortgage availability and force landlords who are unable to remortgage to sell up, with falling house prices and fewer properties to rent among the results.

According to new analysis by the Building Societies Association, EU intervention could prove disastrous.

Some 1.4m landlords with buy-to-let loans are set to be affected by the proposed changes, and some might find they no longer qualify for a remortgage in as little as two years’ time.

The new EU legislation, being brought in to deter ‘irresponsible lending’, is due to be voted on early in the new year and to come into effect in 2013.

At its heart, the EU draft Directive on Credit Agreements Relating to Residential Property says says buy-to-let mortgages should be regulated in the same way as residential mortgages.

This would prevent lenders from taking anticipated rental income into account when deciding the amount of the loan.

The EU proposals, which would bring Britain into line with Continental practice, would force lender to assess buy-to-let borrowers in the same way as mortgage applications by owner occupiers – ie, on earnings and the size of their deposit.

Currently, rental income is treated as unearned income, so would not count in calculations. 

Paul Broadhead, head of mortgage policy at BSA, said: “If rental income is excluded from consideration when underwriting BTL, then the availability of new borrowing could cease fairly rapidly. In addition, those with existing buy-to-let loans may well be unable to refinance.

“Over time this could lead to a reduction in private rented sector properties. At the extreme, current BTL borrowers may be forced to sell their property portfolios, which would have obvious implications for existing tenants and the housing market as a whole.”

Landlord bodies, such as the Residential Landlords Association, have consistently criticised EU attempts to regulate the buy-to-let mortgage sector, saying that it is inappropriate, given that landlords are essentially business people, making business decisions.

Regulation of buy-to-let loans would bring the sector under the remit of the FSA and its successor, thus giving buy-to-let borrowers consumer-style protection in the event, for example, of mis-selling.

The FSA appears to be ready to welcome this.

At the recent CML conference, Sheila Nicoll, director of conduct policy at the FSA, told delegates that it is for the Government to decide whether buy-to-let should be regulated. But she added: “We certainly see benefit in having the buy-to-let market regulated alongside the residential mortgage market.”


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    The private rental sector serves the community, some landlords take pride in offering a good service although this is seldom appreciated by tenants.

    Private sector housing has had substantial new regulation in the past few years making the tenant / landlord quite unbalanced with the advantage being with the tenant.

    Private sector housing is a small fraction of the overall housing market, house prices have consistently risen not by over stimulation by buy to let but by bankers/financiers "selling product" and earning commissions and making profits.

    It is bankers making unproductive consumer loans that need regulating. Bankers need to be encouraged to make productive loans and lend money to private enterprise which stimulates the economy. This includes private sector housing.

    • 16 March 2012 08:51 AM
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    In what way is it 'disastrous for the housing market' for landlords to be forced to sell?

    I bought some apples in a market last week. I didn't think it particularly disastrous that stall-holders were selling - in fact I rather thought that was the whole purpose of a market.....

    At last the EU are thinking of doing something sensible!

    • 15 March 2012 11:14 AM
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    Very interesting to see such enlightened comments from all of you beautiful people. Regulation is the only way to make sure that everybody is properly protected otherwise the strong always come out on top whether they are morally and legally right or not. The FSA themselves are a very poor regulator I grant you but, they are better than nothing, just.

    • 29 November 2011 08:47 AM
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    having dealt with a well known btl mortgage company who unfairly interpreted the mortgage contract to their advantage and my detriment, i generally welcome some regulation ...because btl mortgages are not regulated other than suing there was no recourse. surely the answer to this problem is for rental profit to count towards income when applying for any mortgage be it btl or owner occupier!

    • 21 November 2011 18:56 PM
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    http://epetitions.direct.gov.uk/petitions/20911 time for an EU referendum on our membership. do sign the petition

    • 21 November 2011 09:52 AM
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    Are these people trying to outlaw private enterprise and, in the process, ruin those money making ventures that are still successful? They really won't be happy until we are in a full-blown depression!

    • 21 November 2011 02:31 AM
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    Raw comment but spot on Jmoodie. Well said.

    • 19 November 2011 09:17 AM
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    EU bureaucrats? Tell me what good have they done? The messy euro? The one-by-one financially collapsing continental governments? The ridiculously generous public pension that is crashing all the countries in the continent?

    Now they want to bring UK in line with those bankrupt continental peers, and this is of course warmly welcome by the bureaucrats in the UK because they need to suck the blood from the private sector to feed themselves!

    Public sector only consumes money and all wealth comes from private sector. In case you don't know.

    • 18 November 2011 17:41 PM
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    Well said guys!
    Its about time people in this country woke up and realised that most public sector workers are rejects from the private sector, who are incapable of doing any real work in the real world that produces any income for this country. These third rate, spongers and parasites are not answerable to anyone but themselves and that is why everything that they do only ever effects the people who have to pay there wages. They create there own jobs by making up idiotic schemes that require more third rate spongers to operate them, maintaining there own job security at our expense.

    • 18 November 2011 14:13 PM
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    EEC - go forth and multiply !

    We are a great country without you and if we'd taken your wonderful Euro we'd be in the same mess as the rest of you are now !


    • 18 November 2011 13:08 PM
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    I'm sorry but I think it needs regulation, the reason the house prices are disproportionate is because of self cert and buy to let mortgages, thoese who lent money knowing the applicants couldn't afford it should be held accountable as a lot were taken out by first time buyers who don't really understand the finanal world.

    A year or two ago I wouldn't have written that as I think if you borrow money you should know what you can afford, BTL without taking into account any rental income is redlicious, the point of a BTL is to use the rental income to repay the mortgage, cover vacant occupancy and let's not forget the higher than residential interest, however, we are preying on under educated kids buying for the first time and sometimes using a buy to let to but their own home, higher interest and then they use a self cert higher still. Normally I'd say their problem but when they're doing it because they want a future, these are the responsible ones (albeit not too bright, or so one could assume but may not be correct) trying to get on the property ladder, perhaps with aspirations of building a portfolio and a future for themselves, with no protection from the advisor who makes their bonus other than being activety encouraged in a manner which is currently illegal but not policed, this is one example of many but should'nt these people be policed? Although not by civil servants (that name should be changed to person paid by you to f you over!!) who do more damage than good, effect change which they by virtue or working as a civil servant are effectivetly immune from - perhaps, because as a government worker enjoys virtual immunity from their decisions/actions they benefit from better pay, benefits etc to people in the private sector they should have personal liability, anyone have any thoughts on it?

    • 18 November 2011 12:50 PM
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    I am shocked that I have not heard more about these new LHA rules being put into place. Shared rental only for 35 year old's. The drop is around 30% for those on LHA yet under the Mappa rules.
    The full rent will be paid if they are Pedophiles.

    What Civil Servant/MP thought this idea up

    • 18 November 2011 12:41 PM
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    Can we tell the EU to go fourth and multiply !!!! Isn't it about time we kicked those bureaucrats into the Mediterranean Ocean ????


    • 18 November 2011 12:33 PM
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    At what point does SOMEONE with more intelligence than power say "hang on a minute, shall we try and stimulate the economy rather than crush it into the ground"?

    The idea that rental should not be a factor in professional BTL is absurd beyond belief.

    I take it this has been started by a "if there were no professional landlords, houses would £300 each and the builders would keep meaking lots of them because they should" type of "Blue Sky" thinker.

    Or whatever the current phrases for "Naive Prat" is.

    • 18 November 2011 11:38 AM
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    We currently have about 53% of the working population being paid better salaries, better pensions and better holidays than the other 47% of us in the private sector that support them. None, and I mean none of them, understand that without a successful and profitable private sector there can be no public sector! They also make my blood boil - even more than most because I used to work as a manager in an FE college for 12 years and I know first hand how these people think

    • 18 November 2011 09:45 AM
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    I wholeheartley agree with J Moodie's coments, these idiots that run our country do not live in the real world!

    • 18 November 2011 09:17 AM
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    Well said J moodie.

    • 18 November 2011 09:00 AM
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    This won't happen in a million years the uk government won't allow it because the uk banks will lose billions because of it plus the housing market will crash. Simple.

    • 18 November 2011 08:50 AM
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    Sheila Nicoll, director of conduct policy at the FSA decides its desirable to regulate BTL. What moronic self justification does this civil servant with a huge salary and massive pension, AND a bonus (for what for gods sake! for screwing tax payers and landlords) sitting in the comfort of the tax payers largess have. This will destroy the livelihoods and pensions of thousands of hard working tax payers all for the desire of this moron to grow another department of wasters, justifying there existence at the cost of people who risk their own money in the hope they have a future, taking responsibility for their futures. These government free loaders are again interfering in something they know nothing about, don't care about the consequences and continue to waste our taxes on their useless initiatives because they are overeducated morons who have never created anything of use to our society and are again allowed to jump on a bandwagon to beat the landlord up and finally destroy us. God you people make my fucking blood boil. Piss off and do some real work you useless over privileged twits.

    • 18 November 2011 08:34 AM