Tips from the Practiced Realtor's Spot

The Council of Mortgage Lenders is teaming up with the Government and other UK bodies such as the FSA, to fight another EU power grab, this time in the commercial property market. The EU is planning a swathe a of regulation and rules which will also undoubtedly lead for calls (or an excuse) to establish a pan European regulator for the market, as is standard EU practice when it wants more power.

While the writing has been on the wall for the FSA since the Coalition Government came to power, it has not stopped the agency trying to prove its usefulness, by strongly backing David Cameron's anti bureaucracy crusade. This inevitably means taking a strong if futile stance against the waves of red tape emanating from Brussels.

The EU is planning to begin the harmonisation of mortgage lending. Critics (aka all sane people and experts in the field) point out that it could be potentially harmful to not just the fragile UK housing market, but every sovereign country's domestic property market. What is best for a majority of countries does not mean it will be good for the minority; housing markets are completely different from country to country.

The FSA and CML are untied under this common banner and add that with the British housing and commercial property market still in the doldrums of recession, the wrecking ball that is EU regulation would be the worst thing for any prospective recovery and the long term health of the property market.

So what can we expect from these excessive regulations? If previous EU inspired regulations are anything to go by, double the amount of paperwork for lenders to compete, a reduction in flexibility and avenues open for a lender or broker to operate in, which have always worked in the past. Baisically just all round confusion for consumers and experts, bereft of being able to use common sense as EU regulation strangles the sector.

That is not to say the CML and FSA want a laissez faire system with little to no regulation, more the fact that each countries regulator will know what's best for that market and can regulate accordingly. A national regulatory agency is going to be more accountable and easier to approach than a faceless, undemocratically accountable behemoth.

The FSA is actually in the middle of a consultation and review process regarding tweaking the property market's regulation. After the large boom and bust we have seen in the last decade, more regulation from the FSA or its successor agency was always going to be a given.

It seems likely already that bridging loans and short term loans calculated from the value of commercial property will see a tightening of regulation. Short term lending is at the thin end of the wedge, the most risky and volatile so closer inspection and tighter criteria are inevitable.

The FSA's quiet and measured approach has actually won over many fans in the industry, not least because they are open to ideas and listening to those in the industry about what needs tinkering with. You will not find many sectors where those in the industry are happy and optimistic about the regulators reviews and actions, it seems the 'attract more bees with honey' tactic is working a treat.

So despite the endless bad press and criticism the FSA gets, it is working hard to redeem its reputation and it does seem to be working. Proving it is a useful organisation to the government and fighting unneeded usurpation from the EU it has come down on the side of its own industry. The EU on the other hand would do what it has always done, top down, arrogant and inflexible regulation without listening to those it affects with a one size fits all approach, which harms everyone and everything it touches. Better off out!

About the Author:

Howard O'Gollegos writes for Just Commercial Mortgages the UK's No1 site for the latest commercial mortgage rates and commercial property finance news.

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