IMLA says EU proposals should not be extended to buy-to-let

IMLA says EU proposals should not be extended to buy-to-let


New EU proposals on mortgage lending should not be extended to those looking to invest in buy-to-let properties.

According to industry body the Intermediary Mortgage Lenders Association (IMLA), doing so would restrict growth in the private rented sector, which it says needs to expand rapidly in order to meet rising tenant demand.


Its comments are a response to the European Commission's Directive on credit agreements relating to residential property, which proposes a number of regulations aimed at enhancing responsible mortgage lending and creating a common market for the residential mortgage sector.


But member states will also have the option of extending the regulations to commercial property lending, which could also include buy-to-let transactions.


According to the IMLA, the makeup of the private rented sector in the UK, coupled with the need to meet growing tenant demand, would make such regulations a mistake.

"The UK market is relatively small but needs to expand quite rapidly to meet an expansion in demand being driven by a wide range of social economic and demographic factors," said the organisation.


"The financial dynamics of buying and holding rented residential property in the UK are such that the market will continue to rely upon the motivation of private individuals for the supply of rented housing and they in turn will rely upon the supply of buy-to-let finance to facilitate the required growth.


"The inappropriate regulation of buy-to-let therefore as a consumer rather than commercial activity risks imposing constraints on the market that are not warranted and will have serious impacts upon the supply of property to the sector."


It follows a recent survey by the Royal Institution of Chartered Surveyors which found that increased demand from tenants coupled with a scarcity of rental properties saw rents climb in the three months up to April, with 42 per cent more surveyors recording an increase rather than a drop in rental values.