November 22, 2011
Will EU Legislation get the better of the UK Buy to Let Market?
2012 could prove to be disastrous for the UK buy to let market if new EU legislation aimed at bringing the lending criteria in line with residential mortgages is approved. According to official reports the proposed changes to the legislation would mean that buy to let mortgage applications would be underwritten using the same qualifying criteria as residential mortgages; that is using annual income and size of deposit. Anticipated rental income would no longer be taken into consideration.
Should the changes be approved when voted on early in 2012, the results would start to become apparent as early as 2013 when some first time property investors will no longer be able to get a buy to let mortgage approved, and seasoned investors find themselves unable to re-mortgage. Without the ability to remortgage some landlords could be forced to sell their property portfolios – a move that would see individual landlords and the private rental sector in general suffer.
On the up-side, the proposed legislation changes would also mean that buy to let mortgage lenders would be regulated in the same way residential mortgage lenders are i.e. by the FSA. Admittedly many landlords see this as a good thing but will this one positive outweigh the potentially disastrous negatives due to be bought by the proposed EU legislation changes?
The majority of landlords will undoubtedly say no…
