The Mortgage Directive, officially known as the Credit Agreements Related to Residential Property Directive (CARRP) attempted to create a single regulatory framework which would govern all mortgages within the European Union. The EU lobbied hard for this directive so that EU citizens would understand the regularity regimes when purchasing properties in different member states.
However, in constructing the directive, the EU Commission didn’t take into account the nuances of unusual mortgage products such as buy to let that exist in some member states. Therefore, when the directive was sent to the European Parliament, the text would have made buy to let mortgages illegal. The NLA said this would have been catastrophic for the UK’s private rented sector.
The NLA has worked extensively with several European Parliaments and through pan-European associations such as the International Union of Property Owners (UIPI) and other UK and EU trade bodies to secure a complete exemption for buy to let mortgages from the directive.
Had the directive passed in its original form, it would have been disastrous for landlords operating in the UK’s private rented sector and the economy as a whole.
The final text is now going through the process which involves all 27 heads of state and the European Parliament who will analyse the new text before voting on the new directive to sign it off.
‘The NLA is very pleased with the EU’s decision to exclude buy to let mortgages from the directive. We have lobbied hard to ensure the UK’s main facility for investing in property to rent can remain in place,’ said David Cox, senior policy officer for the NLA.
‘The private rented sector is currently the only growing part of the UK’s housing market and I am certain that a mortgage directive including buy to let mortgages would have prohibited this. This really is a success for the NLA and its European colleagues,’ he added.
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