Should Buy To Let Mortgages Be Regulated Exactly The Same Way As Confidential Residential Mortgages?

I'm in two minds here...

1) It'll reduce the BTL market, which is a good thing for new first time buyers but could lead to further falls in house prices so FTBs from the last 5 years would be even further into negative equity.

2) Experienced landlords would still be able to expand as rents from current properties would count towards their income, and they'd have plenty of equity to use to boost deposits and reduce mortgage interest payments. Only new landlords would be cut out of the loop, so we'd have the situation where those who are rich could still get richer while those who aren't are prevented from ever doing so.

3) BTL is a business rather than a residential loan and should logically be handled on business terms (i.e. the prospective returns on the investment). Then again that kind of thinking is leading banks to preferentially favour BTL applicants over residential applicants!

I'd prefer the BTL market to be explicitly regulated rather than vicariously so through an EU directive.

Oh my, not only is every high street becoming moulded to look identical, but now the EU is making all the nations in its fold to borrow in the same way. Good or bad thing, I don't know.

G-Man's posting makes excellent reading here even though I did have to look up the word 'vicariously'!

What the directive seems to do is to suppress any up and coming property magnates but that could not be a bad thing. Every RTB should be backed up by a rigorous business plan that encompasses a lot more than lending criteria, i.e. future legislation on fair rents, management fees, maintenance, statutory obligations, contingency costings and taxation and insurance costs. As such, this EU directive does seem limited in outlook. There is nothing worse than 'new venture' landlords that borrow on a shoestring, fail to maintain mortgage payment and end up neglecting tenant responsibility or at worst, lose the property.

The other concern is that there should be nothing to stifle an already recessive housing and accommodation market. By all means, allow people to make money out of rented accommodation but do so with the good grace and care for the people that will become the tenants. Perhaps the EU should be concentrating more therefore on how people use this borrowed money, rather than how they get it in the first place. We are in a global recession and if rented accommodation is the way forward, then we need to establish fair and achievable rents for all. And we should not rely on housing benefit levels to achieve that as public money should not have to set the pace. It needs to start with legislation on maximum, 'fair to society' rents and not just what landlords 'think they are worth'. This may well dampen the desire to become a RTB landlord but it will stop what I think can only become a rent 'spiralling' situation.