THE EUROPEAN Union is to clamp down on buy-to-let home owners, insisting they will have to pass tough new affordability tests that could result in tens of thousands of people being denied loans, and others paying more for mortgages.
A report in today’s Daily Telegraph says that new rules are being created after Europe insisted on changes to how “accidental landlords” are lent money.
Up to one-fifth of the 1.6 million existing buy-to-let mortgages are thought to be of this type. Last year, 151,000 buy-to-let mortgages were taken out.
The changes, to be implemented by March 2016, could weaken the housing market, which has slowed because of changes to routine mortgages.
According to a Treasury document, in “accidental” cases, the borrower is a landlord “as a result of circumstance rather than through their own active business decision.
“The Government’s view is that such borrowers are consumers and would need to be covered by an appropriate framework,” stated the document, ushering in changes to the buy-to-let market.