Euro mortgage directive lifts threat to buy-to-let

The European directive on credit agreements relating to residential property (CARRP) has had its final amendments voted through – leaving the UK buy-to-let industry heaving a sigh of relief.

The UK will be allowed to exempt buy-to-let mortgages from the directive, lifting the threat that all buy-to-let lending would have to be assessed without taking rental income into account.

It had been proposed that buy-to-let lenders would have to assess mortgage applications in exactly the same way as residential mortgages. The idea prompted fears that the buy-to-let mortgage market would be crippled as a result.

A spokesperson for the Council of Mortgage Lenders said: “We’re pleased to see that many of the long-standing issues we have been lobbying on have reached a positive outcome for the UK in the EU Parliament.”

None of the changes are quite a done deal, as the legislation still has some way to go, but pundits took encouragement from yesterday’s decisions.

The UK government will actively have to enforce the buy-to-let exemption, and can only do so if they are convinced there is no detriment to consumers. The Government will now come under renewed pressure to make the exemption.

Alan Ward, chairman of the Residential Landlords Association, said: “We look to the Government to support the private rented sector and use the exemption. The RLA has argued a strong case for the last year and believe that our meetings with the Treasury would give us confidence that the exemption can be applied.”


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