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Thursday 7th June 2012 | 10:53
Conservative press release
Conservatives win battle to save buy-to-let mortgages, fight switches to first-time buyer loans
A marathon round of negotiation and hard bargaining by Conservative MEPs paid off today (Thursday) when proposals which could have destroyed Britain's popular buy-to-let mortgage market were finally seen off.
Concerns had been raised in the UK that new EU legislation could effectively shut key parts of the UK mortgage market - such as buy-to-let and bridge loans.
But a key vote in the European Parliament's Economic and Monetary Affairs Committee today approved an amended draft of the legislation with the most harmful clauses removed.
Vicky Ford, Conservative MEP for the East of England, was lead negotiator for the European Conservatives and Reformists group in the parliament and submitted over 130 amendments to the European Commission's original proposals, including 50 requests to delete unnecessary provisions.
Although relieved to have successfully protected buy to let mortgages, Mrs Ford said some elements in the legislation were still very concerning, particularly for mortgages supported by parental savings schemes - a popular way of supporting first-time buyers in the UK. And she said the whole process had been unnecessary.
The legislation will now move into another round of negotiations with national governments and Mrs Ford vowed to continue fighting for removal of the ban on savings linked loans.
She said: "Getting a loan to buy a home is hard enough at the moment, as is affording the rent. We had to roll up our sleeves and fight proposals which could have destroyed important parts of the UK mortgage market - and added to costs.
"While there are some problems with buy to let mortgages, these should be dealt with by UK not EU legislation. The initial versions of the legalisation would have effectively stopped this type of mortgage altogether. This would have had a deeply detrimental impact on those who invest in properties and on the availability of private-rental properties, thus pushing up rents. In the UK, 4.5 million homes are rented privately and many of those residents are people on lower incomes. The one size fits all approach of the EU could still end up shutting down some loans to first time buyers in Britain. We will need to fight for this in the next round of negotiations.
"We have also fought against unnecessary red tape which would have resulted in increased costs being passed on to consumers. For example, we have said it is un-necessary and expensive to force all mortgage lenders to change their computer systems just to provide consumers with the same information they already get, but in a format which Brussels approves.
"Instead of giving home buyers clearer information, some of the draft legislation could result in even more confusion for consumers, especially regarding calculations of APR.
"After over a year's work on this directive, including tabling 130 amendments, numerous meetings with consumer groups, lenders and regulators and lengthy negotiations, I still do not believe that this legislation is justified.
"Nor does it improve the functioning of the single market. Yes, a few people who are buying properties outside their home country may now be given more information and lenders will have to train their staff better. Some mortgage companies will rightly be more cautious about offering loans to people who can not afford them, but there are other people who could have afforded a mortgage but may now not be able to get one.
"Fundamentally the EU shouldn't try to harmonise mortgage markets when countries have such different property markets. Instead of this clunky legislation, problems could easily have been dealt with by a few amendments to existing consumer-credit and banking laws."