Today, the Treasury issued a consultation on how the UK will implement the requirements of the European Mortgage Credit Directive, which needs to be fully implemented by March 2016.
The scope of the directive will mean that some types of buy-to-let mortgage will be captured under regulation. These will be mortgages where the owner or a family member occupies part of the property, including at university or where a property is inherited with a tenant
While welcoming the consultation, the CML is disappointed that the Treasury has found it necessary to make a U-turn on buy-to-let.
Having previously believed that the UK would be able to achieve the necessary framework through voluntary mechanisms, the government now believes that to comply with the directive it has no choice but to impose national law on part of the buy-to-let market.
Smee said: “It is frustrating though that, despite earlier assurances, the buy-to-let position turns out not to have been adequately resolved, resulting in a new proposal for regulating part of the buy-to-let mortgage market.
“The regulatory regime now being proposed is based not on any evidence of a need for additional consumer protection, but purely on ensuring that the European legal requirements are met.”
The Building Societies Association (BSA), together with other relevant organisations in the UK, has consistently argued that a single rulebook for mortgage lending is inappropriate given the diverse markets, cultures and regulatory frameworks across the EU.
The CML hopes that the forthcoming consultation from the Financial Conduct Authority will be published shortly, as that will cover the proposed detail of the changes that will most affect the mortgage market.
Paul Broadhead, head of mortgage policy at the BSA, said:”It is clear that this directive will add cost and complexity to the mortgage process, with no discenible consumer benefit.
“I am pleased that the government is taking a pragmatic approach to implement the minimum requirements to achieve compliance. However, we cannot get away from the potential for further disruption and consumer confusion, so soon after the implementation of the Mortgage Market Review and well before its impact has been fully is analysed.”
For the Treasury paper, click HERE
