The European Parliament’s ECON committee has voted on the European directive on credit agreements relating to residential property (CARRP).
The UK is able to exempt buy-to-let from the directive and can keep the KFI for five years after the Directive has been implemented.
“It is encouraging that the unique characteristics of the UK housing market have been recognised and in particular that it should be left to the UK gGovernment to decide how best to achieve the required balance between consumer protection and the need to support a rapidly growing private rented sector with buy-to-let finance,” said John Heron, chair of the Intermediary Mortgage Lenders Association (IMLA).
““However, it should be recognised that there is no version of the Directive that excludes buy-to-let in entirety. Even the ECON approved draft would require the UK authorities to exempt buy-to-let and they will only be minded to do so if they are convinced that there is no material detriment being caused to consumers in the way buy-to-let products are advised on and sold. It is clear that the FSA has concerns in this area and the industry needs to work hard to ensure that areas that have troubled the regulator such as “gaming” and fraud are effectively mitigated by water-tight processes.
“Overall this announcement is good news but it is far from being a ‘done deal’, this legislation has a series of stages to go through before it is finalised.”
The CML said: “Some provisions have been included which only emerged at a late stage of negotiations but which may not have had their full implications considered and we will continue to work on these issues as the Directive goes into its next stage of discussions.”