The Directive on the Credit Agreements for Consumers relating to Residential Immovable Property (Directive 2014/17): A Regulatory Explanation and a Private Law Analysis

With the devastation wrought by the 2008 ‘property market bubble’ still fresh in the mind on one hand, and a spate of recent enthusiasm manifested in the ‘rush to the property ladder’ on the other, the newly enacted Directive 2014/17 seeks to strike a middle ground of reasonableness in the delicate and sensitive matter of the security granted by the buyer of a residential property.Against this background, the present contribution analyses, first and foremost, the norms of a regulatory nature introduced by the new EU piece of legislation and the attempt to shape a new category of consumer. Among these precepts, attention is particularly afforded to the principle, of a public nature, prescribing that the bank’s assessment to grant a mortgage shall be prevailingly based on the ability of the mortgagor to repay the debt, rather than on the expected (but undemonstrative) burgeoning future value of the property.Furthermore, the discussion focuses on the private law principles introduced by the Directive. Among these is the onus lying on the bank to provide adequate information about the terms and conditions of the mortgage. More interestingly, the directive at stake derogates from, and goes beyond, the notion of prohibition of ‘agreement of forfeiture’ existing in some civil law jurisdictions. This novelty, the ancillary legal provisions of art 28 of Directive 2014/17 as well as their impact on the system of civil proceedings and foreclosure existing in each country, provide fertile ground for a legal and comparative analysis.