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BTL mortgage arrears fall, but concern grows about impact of Universal Credit

The number of buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance dropped in the third quarter of this year, reflecting a wider trend in the market.

Figures from UK Finance found that there were 4,660 buy-to-let mortgages in arrears in this level in Q3 2018, down 1% on the same period last year.

“Thanks to incredibly low interest rates, mortgage arrears and possessions continue to remain at historic lows,” said Shaun Church, director at Private Finance.


The affordability of mortgages is a story often overshadowed by the focus on the UK’s housing crisis,” he added.

However, there were 1,150 buy-to-let mortgages with more significant arrears (representing 10% or more of the outstanding balance) in Q3 2018, which is up 3% on the corresponding quarter of 2017.

Mark Pilling from Spicerhaart Corporate Sales, who deals with arrears and repossessions on behalf of lenders, suggests the issues with Universal Credit could be a factor in this rise.

He said: “The latest arrears and possessions statistics reveal that while arrears and possessions on residential properties remain historically low, there has been a 3% increase in the number of buy-to-let mortgages in significant arrears compared with the same quarter of the previous year. These figures suggest that the problems with Universal Credit are now really starting to impact landlords.”

Based on responses from over 2,200 landlords, the Residential Landlord Association’s (RLA) research exchange, PEARL, has found that 61% of landlords with tenants on Universal Credit have experienced them going into rent arrears. This is up from 27% in 2016.

The study found that on average Universal Credit tenants in rent arrears owed almost £2,400, which is up almost half - 49% - compared to last year. 

Piling added: “Universal Credit has been plagued by problems since it was introduced, and while the government announced in the Budget that more money will be dedicated to the new welfare system, it is clear that much of the damage has already been done.

“Many claimants experienced huge delays in receiving their money, forcing them into arrears, and many are receiving far less than they did with the old system, which means in many cases, they simply do not have enough money to pay their rent on their reduced incomes.

“From a lenders point of view, it is important that they keep a close eye on their buy to let customers who have tenants who are on or are soon to be moved onto Universal Credit so they are able to work out the best solution for those who are struggling so that repossession is a last resort.”

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Poll: Do you agree with Mark Pilling from Spicerhaart Corporate Sales that issues with Universal Credit could be a factor in the rise in landlords in significant arrears?


  • PossessionFriendUK PossessionFriend

    Would love to know what planet the 7% are from

  • icon

    My guess would be that it is landlords in bad areas that are trapped. They are taking what ever rent they can whilst knowing higher rent payers just are not interested. I would also bet that the same properties have lost a lot of sale value for the same reasons so mortgage companies don't want to force sale unless they really have to.

    Now, if councils were to keep their properties in bad areas up to scratch in the same areas - but that is just a fairy tale for many reasons.


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