BTL landlords in mortgage arrears rockets by 29%

The number of BTL landlords who are behind on their mortgage payments has rocketed by 29% in the last quarter, UK Finance says.

The trade body for lenders said that there were 11,540 buy to let mortgages in arrears in the third quarter of 2023.

The current arrears figure represents 0.57% of all outstanding BTL mortgages in England and Wales.

UK Finance said that the rise in arrears was driven by the impact of cost-of-living pressures and higher interest rates – and landlords might not be able to pass on higher costs to tenants.

Landlord repossessions rose by 11% in the third quarter of 2023, compared with the same period in 2022, with 450 properties repossessed.

‘Miserable situation for landlords who are losing money’

The president of trade body ARLA Propertymark and director of lettings at Martyn Gerrard, Greg Tsuman, told the BBC: “It’s a miserable situation for landlords who are losing money, renters who are paying extortionate rents, banks who are finding their loans are in arrears and HMRC isn’t even increasing its income due to the number of landlords leaving the market.

“No one is winning in the present situation.”

Ben Beadle, the chief executive of the National Residential Landlords Association (NRLA), said: “With the demand for rented housing massively outstripping supply, we need a healthy and vibrant private rented sector.

“Today’s figures from UK Finance are therefore extremely worrying.”
He added: “The Chancellor needs to undo the damage done by tax hikes on the sector and reinstate mortgage interest relief in full for the private rented sector.”

Keeping up with mortgage payments

Homeowners are also facing difficulties in keeping up with their mortgage payments with 87,930 homeowner mortgages in arrears, 7% more than the previous quarter.

This accounts for 1% of all outstanding residential mortgages.

The number is still much lower than the peak of 207,200 in the third quarter of 2009 during the financial crisis.

This, UK Finance says, reflects the benefits of lender stress tests that ensure borrowers can afford their mortgages even if interest rates rise.

‘Anyone worried about making their mortgage payments’

The managing director of personal finance at UK Finance, Eric Leenders, said: “Anyone worried about making their mortgage payments should contact their bank as soon as they can.

“All lenders have teams of experts ready to help anyone struggling with their mortgage payments with tailored support.

“The sooner you get in touch, the more support options your lender will be able to offer.”

‘Rate at which arrears is increasing’

Adam Oldfield, the chief revenue officer at Phoebus Software, said: “The rate at which arrears is increasing is the worrying statistic that is unlikely to fall in any time soon.

“As worrying as this increase may be to many, the number of possessions fell.  This shows the increased forbearance that lenders are showing to struggling borrowers.

“When you consider that lenders had to stress test borrowers up to 8% for almost all of the mortgages in existence today, the question is why is this happening?

“The answer, unfortunately, is most likely that the ultra-low interest environment that we have experienced over the last few years has led to a level of complacency. “

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