Home Residential PropertyBuy-To-Let 93% jump in landlords falling into mortgage arrears, but eight times more homeowners in trouble

93% jump in landlords falling into mortgage arrears, but eight times more homeowners in trouble

by Seamus Doherty Property Reporter
29th Feb 24 11:54 am

The latest analysis by specialist property lending experts, Octane Capital, shows that the number of landlords falling into arrears has climbed by 93% in a single year, far higher than the 22% increase seen in homeowners arrears, however, eight times more homeowners fell into arrears in 2023 than landlords.

Octane Capital analysed data on mortgage arrears from UK Finance (Q4, 2023 – latest available) and how these figures have changed over time.

The data shows that 13,570 landlords are estimated to have fallen into arrears on their mortgage during the final quarter of last year. While this equates to just 0.7% of total buy-to-let loans, it’s by far both the highest number of arrears seen over the last five years, as well as the highest proportion of total loans.

The Q4 total of 13,570 also marked a 93% increase in buy-to-let arrears versus Q1 2023, having increased consistently over every quarter.

As a result, a total of 41,090 landlords fell into arrears on their mortgage in 2023, an average of 10,273 per quarter, marking a 76% year on year jump versus 2022 when arrears had shown signs of easing with a -4.1% annual decline (2021 vs 2022).

It’s a similar story for homeowners albeit arrears haven’t increased at the same pace seen across the buy-to-let sector. However, total homeowner arrears still jumped by 13% in 2023 when compared to 2022 having increased each quarter, with this increase also reversing the previous annual decline of -8% (2021 vs 2022).

But while homeowner arrears may not be increasing at the same phenomenal rate as that seen across the buy-to-let sector, the volume is far greater. In 2023, 85,028 homeowners fell into mortgage arrears, over eight times the number of landlords.

CEO of Octane Capital, Jonathan Samuels, said, “Interest rates remain at their highest since 2008 and it’s clear that while we haven’t seen the base rate increase since August of last year, both landlords and homeowners alike are struggling to keep pace with the increased cost of their mortgage.

“While homeowners are more likely to fall behind on their payments, the sharp increase in landlord arrears is a worrying sign for the rental sector.

“There’s already a desperate shortage of rental homes available to serve the huge demand from tenants. An increase in buy-to-let arrears suggests that this issue could be set to intensify as landlords offload their portfolios to pay their debts, or worse, see them repossessed.”

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