Repossessions Are on the Rise: What Does This Mean for Lending?

Red brick wall with black graffiti

New data has revealed that the number of rental properties being repossessed by lenders due to owner arrears is up 40% on last year. Here we examine the figures, reveal why this is happening, and how you can beat the statistics.


Repossessions Are on the Rise

According to figures from UK Finance, the trade body for banking and finance, 4,550 buy-to-let mortgages were in arrears of 2.5% of more of the total borrowing in the third quarter of this year, with a thousand of these in serious arrears of 10% or more. In Q2, 800 were repossessed.

It’s Not All Bad Though

Although these numbers may sound shocking, it is important to remember this represents just a quarter of 1% of landlords and this has not dampened demand for this kind of venture. Furthermore, this figure rises to just over three-quarters of 1% for owner-occupiers.

Although repossessions are up markedly, the total number of buy-to-let mortgages in arrears and ‘at risk’ is actually down 5% on this time last year.

Read more: The State of the UK Housing Market at the End of 2019


What’s Causing These Repossessions?

Well, the recent reduction in income tax relief and the 3% surcharge on stamp duty does not help in an environment with increasingly tighter regulations. Those who are inexperienced are advised to be realistic about costs, to speak to an experienced IFA, and to ensure suitable levels of finance using services like our own.

HMRC reports there are more than 2.5m landlords in the UK with most owning just one or two properties. Howsy states these landlords should have an average annual budget of £2,344 per property to cover the cost of repairs and maintenance, as well as lettings management, or £4,750 in London.

Its CEO, Calum Brannan, commented:

“The buy-to-let sector can be a minefield for the amateur investor and now more than ever, it’s imperative that you do everything you can to maximise the return on your investment.”

A competitive finance deal could help with just that.


Put Your Best Foot Forward

If you are considering investing and want to ensure your profitability, reading ‘A Guide to Commercial Property Investment for Buy to Let Landlords is worth your time. Here you’ll find guidance on a number of aspects to consider before investing, including income, leases, running costs, and taxes and fees.

And, if you require funding, our friendly and experienced buy-to-let mortgage brokers can help you to find a deal suited to your specific needs.

Article By Jamie Williams

March 16th, 2020

Jamie Williams is an integral part of our specialist finance team. He is an expert in bridging and development finance, as well as commercial and second charge mortgages.

With over 17 years experience in the mortgage and specialist finance world, Jamie uses his unrivalled knowledge to provide the ultimate client experience.

See more articles by Jamie

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