As reported in the property trade title
Property Drum the proposed EU regulation on mortgages, designed to combat
fraud, which is due to be voted on early in 2012, could change the way some
buy-to-let lending is regulated to bring it into line with rules governing
conventional residential mortgages.
Critics are expressing fears that the new
rules could seriously reduce the number of buy to let mortgages that are
granted. This is because lenders would be required to test affordability using
standard residential mortgage criteria: relative size of deposit, existing
income, other debts, but they would not be able to include potential rental
income, meaning that a landlord investor would have to be able to afford to pay
the mortgage on the property without receiving any income from it.
Everyone will appreciate the need to reduce
fraud but is this yet another hammer to crack a nut? In a country populated by
large numbers of frustrated first-time buyers forced into the private rented
sector, high rents with longer tenancies, low property purchase prices and
better returns than other investment opportunities, the buy to let sector is
growing, and the number of mortgages servicing it is growing too.
In the third quarter, buy-to-let lending as a
proportion of total lending hit its highest level in three years, jumping 16
per cent in value. According to one lender, 10 per cent of its applications
last year were from prospective landlords. This year, the proportion reached 80
per cent. A spokesperson for Lloyds recently forecast 20 per cent growth in the
buy-to-let mortgage market in 2012.
Of course, this situation is rather different
in many EU countries, where most people have always rented and the change from
aspiration to home ownership to reconciled to long term renting is not an
issue, and there are many more properties available to rent.
But in the UK, where buy to let is one of the
few areas of the property business that is doing well, heavy handed EU
legislation could affect our rental housings stocks far more dramatically than
in other countries.
If the new legislation is passed, potential
new investors and landlords wanting to develop their portfolios, and / or
remortgage current assets, should get a plan underway soon; the new rules would
take effect from 2013. At least an increase in activity in the short term would
be good for the market; if 50 per cent of the estimated 1.4 million landlords
in the UK
bought a new property before the new legislation hits, we’d have 700,000 more
rental properties available for tenants.
Kim Davies, co director explains, “Since we launched Living
Property Waveney we have been present on facebook, however we wanted our
friends and followers of our brand to have access to all our property content
and it’s this we have now developed. You can now see all our rental properties
on our ‘Listing’ page and search just as you can on our website www.livingproperty.co. We recognise
that many people now use Facebook in a similar way to Google, searching for
product or service provider, so developing our page in this way makes sense for
us and our customers”. 
Paula Cunningham, co director continues, “We also recognised
that Twitter is a fantastic broadcast tool and that we can use it to let potential
renters know about new rental instructions to the market, all you do if follow
us @LivingProp_NEW. Each tweet gives the property address and a link to the
full property details so you can arrange a viewing even when you’re on the go
via a smart phone. In addition to broadcasting new property listings we have a
twitter feed dedicated to giving news and information relevant to the lettings
industry, this can be followed @LivingProperty”.
Paula Cunningham and Kim Davies, co directors, have made a
substantial investment in livingproperty.co with the aim in providing tenants
and landlords an enjoyable, informative browsing experience.
