Treasury has now laid the required draft statutory instrument before Parliament to implement the European Mortgage Credit Directive. In doing so they have recognised that last years’ MMR made most of the changes required to deliver an effective UK mortgage market. The government wants to minimise the impact on the UK market as far as possible.

The main changes are to introduce the regime for second charge lending and for consumer buy-to-let. For second charge it is confirmed that this will join the FCA full mortgage regime. Builders shared equity will be part of the new regime, and seconds as well as firsts can introduce the MCD requirements up 6 months before the deadline date of 21 March 2016, if ready and willing.

Government has decided to introduce a limited regulated regime for consumer buy-to-let. These are cases where the property has not been purchased with the express requirement of being let as part of a business. These consumer BTL contracts will have to be dealt with by brokers who are registered with the FCA and subject to specific rules within MCOB, which will be consulted on by FCA in the coming months. The remainder of commercial BTL mortgages will remain unregulated loans.

AMI requested that government review the exemptions available for mortgage intermediaries from the provisions of the consumer credit regime. In addition to the exemptions already allowed for those advising on regulated mortgage contracts on matters such as debt counselling, brokers should not be captured under the consumer credit rules for working on unregulated BTL mortgages. Treasury has accepted this and is making the amendment as part of the changes laid before Parliament. This will come into effect at a future date.

This means that most firms still need to hold an interim or full consumer credit permission until March 2016, but may only need mortgage permissions after that point.

Robert Sinclair
Chief Executive , AMI

Jan 2015