Landlord repossessions up 40%

Dean Evans
By Dean Evans November 21, 2019 06:25

The health of Britain's private rental sector may be deteriorating, experts warn, as more landlords plan to leave the market and official figures signal a spike in repossessions.

Figures released this week from banking trade body UK Finance revealed a 40 per cent rise in buy-to-let repossessions on last year.

Some 800 buy-to-let mortgaged properties were taken into possession in the third quarter of 2019, compared to 570 in the same quarter of the previous year.

Meanwhile, there were 4,550 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2019, five per cent fewer than in the same quarter of the previous year.

While the number of landlords in arrears of between 5 per cent and 7.5 per cent of the outstanding balance also fell by 21 per cent over the year, the number of those in more serious arrears of between 7.5 and 10 per cent grew by 9 per cent.

The number of landlords in arrears over 10 per cent of the outstanding balance fell by 1 per cent, the UK Finance figures showed.

The banking trade body said the uptick in repossessions was 'driven in part by a backlog of historic cases'.

Two years ago the city regulator changed the rules on how lenders have to calculate how much a borrower owes the lender each month if they fall into arrears.

UK Finance says this has led to lenders reviewing a large number of cases on an individual basis and applying for repossession 'only when all other options have been exhausted'.

This, it claims, accounts for the backlog which it now says has caused the sudden uptick in repossessions.

Landlords themselves take a different view, however.

David Smith, of trade body the Residential Landlords Association, said: 'Repossessions for mortgage arrears take place for many different reasons.

'Mortgage interest relief changes, which are now almost fully implemented, the increasing cost of regulation and the ever increasing time to repossess a property are all major factors.'

'Since most repossessions of this kind lead to tenants being evicted it is vital that the next government actively supports the majority of landlords doing a good job to provide the homes to rent the country needs.

'If we want to develop long-term tenancy models we need also to support landlords to stay in the market long term.'

Dean Evans
By Dean Evans November 21, 2019 06:25
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