Thursday, June 7, 2012

Would you Adam and Eve it ?

Buy-to-let set to escape EC's mortgage credit directive

The buy-to-let sector has been given a reprieve after a committee scrutinising the European Commission’s mortgage credit directive voted to allow the UK to exclude these types of loans from the new rules. Buy-to-let experts have warned that the sector would be stifled it were captured by the proposals, which say lenders must take into account affordability when they advance a home loan. They argue buy-to-let loans are fundamentally different as landlords use rental income to meet the monthly repayments in most cases.

Posted by jack c @ 03:37 PM (2211 views)
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12 thoughts on “Would you Adam and Eve it ?

  • Thecountofnowhere says:

    You could not make that up.

    “They argue buy-to-let loans are fundamentally different as landlords use rental income to meet the monthly repayments in most cases.”

    So they use the persons money top buy the house…for themselves. This nonsense has got to end.

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  • mark wadsworth says:

    I would Adam it as well as Eveing it. As Mombers pointed out recently, how come advertising for mortages doesn’t have the usual caveats about you can lose more than your original stake with a leveraged investment, or the value of your investments can go down as well as up?

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  • sibley's b'stard child says:

    Interesting Jack, is there potential for conflict between the MMR and the EC’s mortgage credit directive?

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  • charlie brooker says:

    “They argue buy-to-let loans are fundamentally different as landlords use rental income to meet the monthly repayments in most cases.”

    If BTL income is only as stable as that of the average tennants’s employment, why is it seen as superior?

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  • mark wadsworth says:

    CB, actually it is superior.

    If Mr & Mrs X buy a house, their mortgage payments have to be funded out of Mr & Mrs X’s incomes, if they get sacked, then oo-er.

    If Mr BTL buys the house and rents to Mr & Mrs X, if they lose their jobs he can either turf them out and get Mr & Mrs Y to live there, or alternatively, Mr & Mrs X will go on housing benefit.

    Remember: the more land you own, the more money you get.

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  • only because a large number of ministers own BTL and make money from it

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  • Great, so home owners will subsidize buy to let investors. And by that I mean the children of parents priced out of the market. They will pay by not being born.

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  • sibley’s b’stard child (Thursday, June 7, 2012 04:19PM)

    Yep there is a conflict between UK financial services regulation and various directives from Europe (as if it wasnt all too complicated to begin with)

    There is (IMO) a growing bias towards BTL

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  • Libertas: It will always be thus until such point as politicians and their paymasters are persuaded that a Land Value Tax is the remedy. However, turkeys voting for Christmas doesn’t appear very likely at the moment.

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  • the risk comes not from gaps in tenancy which is why they used to ensure your salary could pay both mortgages

    apparently thats no longer a risk…well if prices do fall and ftbs can buy rather than rent…who’s gonna rent the 1.4 million btlets?

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  • I wouldn’t worry , I work for a Bank and have a host of resi investor clients. We don’t want them, but they can’t refinance as nobody else wants them either.

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  • Owners can rent their property out if they get into trouble repaying the morgage, so BTL is not superior. obviously they would have the issue of finding somewhere to live. So what BTL are actually saying is we own multiple properties and therefore are richer and more able to weather any storm and therefore should get preferential treatment. never might that many BTL are recklessly leveraged.

    To illustrate the point further, owners could take a BTL mortgage to escape the regulations, and rent it to themselves.

    This is simply preferential treatment for BTL.

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