Following months of wrangling, the EU has finally decided that UK buy to let mortgages will be exempt from the tough restrictions governing other types of mortgages and whereas the rules for lending on residential mortgages look set to be tightened up considerably, landlords seeking financing for rental properties will not be affected.
If the EU hadn’t seen sense, landlords would have found it very difficult to obtain mortgages as lenders would not have been allowed to take anticipated rental income into account when deciding how much to lend; instead they would have based their lending decision on annual earnings, in much the same way as lenders currently do when considering whether a customer is eligible for a residential mortgage. Obviously for many landlords, annual income isn’t enough for a lender to consider giving the green light for a buy to let mortgage and in these cases, investing in rental property or expanding an existing property portfolio would be impossible.
The current draft agreement has not yet been signed off, but it has been agreed in principle and the bill will now be passed through each member country of the European Union so that individual members can iron out any last remaining sticking points. This process is expected to take around a year, but for the UK at least, buy to let landlords can finally rest easy, although industry experts are still keeping a close eye on the proceedings to ensure no further issues come to light which could affect buy to let landlords in the UK.
