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Can the EU impact Buy-to-let Mortgage demand?

This is the title of a petition on the governments e-petition website, which can be found at: epetitions.direct.gov.uk/petitions/22767 and currently has just under 3,000 signatures.

The aim of the petition is described as: To exclude loans to residential landlords (buy-to-let mortgages) from the EU draft directive on Credit Agreements. Thereby ensuring that lenders still have the opportunity to access affordability based on rental income not just a borrower’s personal income.

The petition has been created in response to a proposed EU Directive which threatens to severely damage the private rented housing sector. The draft directive is aimed at tackling irresponsible lending on mortgages following property booms and busts in countries such as Spain and Ireland. However, the most worrying suggestion made under its provisions is that when assessing the ability of the applicant to afford mortgage repayments, lenders will not be able to take into account the rental income that would be generated from the property.

However, it has been estimated that almost 90% of English landlords are private individuals and that most purchases are made on the basis that the rental income will cover the mortgage payments, so were it to come into effect it would most likely withdraw 90% or more of buyer demand from landlords.

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