Landlord loans excluded from EU regulation.
After receiving widespread opposition from the UK property industry regarding the EU’s proposals to regulate the Buy-to-Let mortgage; the European Parliament’s ECON committee have voted to leave Buy-to-Let lending outside of the directive.
The revised directive allows the UK to exempt Buy-to-Let mortgages from the directive and allows for the current KFI document to remain for five years after the directive has been implemented.
Legislation requirements of the CARRP directive will be adapted to reflect differences among EU member states’ national mortgage and property market and information for buyers will have to be presented in a consistent format across the EU.
Credit Agreements Relating to Residential Property (CARRP) is aimed at implementing a Europe-wide mortgage policy, however UK lenders claimed this was unfair on Buy-to-Let landlords; as the UK market is considerably different to the rest of Europe.
If it had been implemented, this would have meant that the main lending criteria would be the borrower’s earnings – which The Council of Mortgage Lenders (CML) and the Association of Mortgage Intermediaries (AMI) strongly protested against, with the view that Buy-to-Let in the UK should continue to operate and be assessed as commercial borrowing.
This now ensures that lenders will still have the opportunity to access affordability based on rental income, and not just a borrowers personal income.