This has crept back onto the agenda after we thought it was seen off last time around. Regulation of the buy-to-let (BTL) sector in the UK is what I am talking about here. The UK resisted and subsequently avoided this when the EU tried to impose tighter control of all mortgage lending, by successfully positioning BTL as a business activity but now it looks like some aspects of BTL are going to be regulated after all.
Detail is thin right now but the term 'consumer buy-to-let' used to try to differentiate between a business transaction and a consumer one - the latter being subject to regulation now it would seem. This could affect people looking to rent out inherited property and my main concern, accidental landlords: where people rent out their former or existing homes.
The reason that I am concerned about accidental landlords is that often these are people that either cannot sell their properties or if they could would result in a loss or outstanding debts to pay. In this situation, renting gives them more time and breathing space of course. However, if they would then be subject to an affordability test to gain consent to let or a BTL mortgage along the lines of the post-MMR checks and stress tests, then I would imagine that many of these would fail. In that situation, where would it leave them? Possibly, in some financial distress I imagine.
I am unclear as to how many people this could affect and on the flip side, attempting to differentiate between professional and amateur landlords is probably not a bad idea in general terms anyway. With the latter category possibly asked to use an approved letting agent or personally accredited to be able to rent say, that could help to improve standards overall but that is not related to lending regulation per se.
On the other hand, it could also be the thin edge of the wider regulation wedge as well...but I do believe that the importance of BTL in the UK should lead to a tougher fight if Europe intends to push further.
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