A taste of things to come – The Prudential Regulation Authority (PRA) to Impose Tougher buy-to-let rules.

Seminar Prince Evans LLP with guest Handelsbanken

The European Mortgage Credit Directive (MCD) came into effect on 21 March 2016 which has resulted in a number of changes to UK mortgage regulations.

The MCD is European legislation published by the European commission designed to foster a single market for mortgages to protect the consumer. The rules are set by the Financial Conduct Authority (FCA).

The main changes are:

  • Second charge mortgages will be moved into the regulated regime for mortgages rather than Consumer Credit Act
  • Some buy-to-let will become regulated by the FCA

With regards to 2nd bullet point, MCD has created the Consumer Buy To Let loan (CBTL). These loans are to ‘accidental landlords’ where the property was never initially purchased to rent out.

A taste of things to come – The Prudential Regulation Authority (PRA) to Impose Tougher buy-to-let rules.

This is currently under consultation but the PRA wants lenders to tighten their risk assessment. It is suggested this will come into effect 1 Jan 2017.

Why is this happening?

  • Concerns that the housing market is overheating*
  • Reduce the number of buy-to-let mortgage approvals by 10-20% by the end of 2018**
  • Buy-to-let portion of the mortgage market at Q4 2015 accounted for 15.9% (£10b) of all mortgage lending. By comparison 20.9% (13.2b) accounted for first time buyers*
  • Low interest rates and high house prices gives cause for concern against for over borrowing*
  • Housing shortage in some areas on England particularly London & South East*

Your home may be repossessed if you do not keep up repayments on your mortgage.

chris-ttouli-0915506Chris Ttouli

Ealing Branch Manager

Unit 1

48 The Mall



W5 5TJ

Office phone: +44(0)20 8579 0004


** Source. www.bankofengland.co.uk/pra, * www.ibtimes.co.uk/buy-to-let-mortgage-market

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