The revised Directive also allows for the current Key Facts Illustration document to remain for five years after the directive has been implemented. The KFI is likely to be replaced with the European Standardised Information Sheet (ESIS).
The UK as an entity has campaigned against the inclusion of buy-to-let in the Directive, and now all member states can choose to exempt the product.
The Directive read: “Member States may decide that some or all of the Articles of this Directive do not apply to credit agreements where the property is not to be occupied as a dwelling by the consumer or a related person, where the consumer accepts to be exempted from the provisions of this Directive.”
Paul Broadhead, head of mortgage policy at the Building Societies Association, said: “Although this Directive still has some way to go to reach its final form, the indications from this morning’s vote in the European Parliament are that the UK government may be able to choose to exempt buy-to-let mortgages which is good news.
“We are disappointed that longer term the KFI looks like it will be replaced by the ESIS which gives consumers less information and will cost lenders a substantial sum to implement. However, the indications are that the UK will have five years to implement that change.”
The Council of Mortgage Lenders (CML) said the one area it is potentially concerned about is the implication of Standard Variable Rates having to be linked to a reference rate, as noted in the Directive.
“We believe that the Directive is saying that a lender’s SVR has to be clearly linked to the Bank of England Base Rate. We believe this would make things more complex,” said the CML.
