Recent data from UK Finance demonstrates an increasing trend of landlords defaulting on their mortgage payments compared to residential property owners.
During the transition from the third to the fourth quarters of 2023, instances of delinquency in buy-to-let properties rose by 18%, while residential property owners experienced a 7% increase.
It is important to note that there are significantly more delinquency cases in residential properties – 93,680 compared to 13,570 in buy-to-let properties.
Adam Oldfield, chief revenue officer at Phoebus Software, stated: “The elevated level of delinquency and property repossessions in the buy-to-let sector remains a pressing concern for lenders, particularly given the prevailing sentiment in Europe. The recent downturn in Germany’s Deutsche PBB bonds due to concerns about the bank’s property exposure, stemming from the struggling US property market, serves as a notable example.”
Furthermore, the number of buy-to-let properties being repossessed has risen by 11% in the quarter, in contrast to a 14% decrease among residential property owners.
In Q4, 500 buy-to-let mortgaged properties were repossessed, compared to 540 homeowner mortgaged properties.
Mark Tosetti, group partnerships director at Movera, a consortium of home moving businesses including ONP Solicitors, commented: “Regrettably, these statistics indicate a continued escalation of mortgage delinquency, particularly evident in buy-to-let properties. Landlords are facing notably challenging circumstances. Nonetheless, the decline in homeowner possessions is a positive development.”
He added, “We hope to observe improvements in delinquency and repossession levels in the current quarter as market confidence is restored. Positive signs such as the anticipated decrease in interest rates in 2024 offer hope for the future.”