European u-turn saves buy-to-lets
The buy-to-let mortgage market has been rescued following a climbdown by European policy makers.
A new EU directive had sought to curb buy-to-let mortgages by limiting the ability of landlords to borrow from banks based on future rental income.
But following extensive lobbying from the UK, where the buy-to-let market is seen as a potential stimulus for the private rented sector, the European Parliament elected to remove buy-to-let mortgages from the scope of the directive.
The Residential Landlords Association, one of a number of groups lobbying for an exemption, hailed the victory as ‘a common sense solution to a measure that would have crippled the private rental market’.
Alan Ward, chairman of the RLA, added: ‘With a chronic shortage of properties in the sector, the initial proposals would have exacerbated the problem still further, causing further difficulties and higher rents for those looking for accommodation.’
The decision to exempt the mortgages was taken by the European Parliament’s economic and monetary affairs committee. It still requires approval from all MEPs and the Council of Ministers.
The new directive on mortgages includes the introduction of a 14-day cooling off period after signing a deal.