Changes to 2nd mortgages and buy to let from 21st March 2016
Currently all buy-to-let mortgage are in a unregulated section of the mortgage market. However as from 21st March 2016 a new European legislation known as the Mortgage Credit Directive (MCD) is designed to bring mortgage lending in-line across all member states to create a single mortgage market; it is intended to increase protection for first and second charge lending to consumers. This will become UK law from the 21st March.
From 21 March 2016 the buy-to-let mortgage market will be split into two: those landlords who take out a buy-to-let mortgage as a “business” operation, i.e., a project to buy a second or more homes to make money; these will remain unregulated.
On the other hand, those who rent out their own home as a temporary expedient, such as when they want to work away for a time, or when they can’t sell and want to buy somewhere else, their type of buy-to-let mortgage borrowing will come under the regulatory control of the Financial Conduct Authority (FCA) – it will be classed as a consumer mortgage as opposed to as business one.