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Monday, September 08, 2014

The death of 'Let to Buy'

Worrying news for those 'accidental landlords' out there. It appears the Treasury are going to enforce the forth-coming European Mortgage Credit Directive on those BTL mortgages classified as 'unplanned'.

This will mean those homeowners who find themselves wanting to switch a residential mortgage to a BTL mortgage on a home they are unable to sell will find themselves subject to increased regulation and affordability checks.

As it stands, BTL mortgages are not regulated in the same way as residential homebuyer mortgages, landlords are perceived as 'businesses', so presumed to better understand the risks, unlike owner- occupiers, who are considered innocent lambs who need protection from lending wolves. 

In recent years, post 2007 credit crunch, a slowed property market has lead many homeowners to swap unsold properties onto a BTL loan with their lenders. The practice, known as 'Let to buy' might come to an end with the introduction of this European Mortgage Credit Directive in 2016.

The Treasury said: "There are some situations where borrowers do not seem to be acting in a business capacity. Examples of this may be where the property has been inherited or where a borrower has previously lived in a property, but is unable to sell it so resorts to a buy-to-let arrangement. In these cases, the borrower is a landlord as a result of circumstance rather than through their own active business decision."

The Council of Mortgage Lenders are arguing against the proposal.

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Paul Barrett said...

Good news it is about time that Acc LL were prevented from becoming LL.
They depress rents for proper LL as they do not face the same costs
They usually have lower mortgage costs and can afford to charge lower rents.
Get rid of Acc LL and rents will increase.
Acc LL will have to sell up or stay there or rent illegally.
Which most of the 300000 Acc LL are presently doing.
The sooner Acc LL are prevented the better for the professional PRS
For too long tenants have been able to pay lower then market rents because of these unrealistic Acc LL.
Their cheap and lower LTV resi mortgages are cheaper than a normal BTL mortgage at high LTV.
The sooner ACC LL are eradicated the better!!

Anonymous said...

If you are a professional landlord you should have no problem choosing the right housing stock for maximum returns.
Such ridiculous quotes if you was in the same position as some of the acc ll would it be fair?If the law changed to your detriment.
wait till labour comes back in power and suggests tougher laws on landlords we will all be in trouble.