Sharp rise in serious mortgage arrears

There has been a significant increase in the number of landlords who are seriously behind with their mortgage payments, new figures show.

During the final quarter of last year, there were around 1,200 buy-to-let mortgages in ‘significant arrears’, up 20% on the corresponding period in 2016, according to UK Finance.

The data suggests that some landlords may be starting to struggle financially, following a series of tax changes.

In addition to the buy-to-let mortgages in significant arrears, which means that the landlord owes more than 10% of the outstanding balance, there were 5,100 buy-to-let mortgages in less serious arrears of 2.5% in Q4 2017 – an increase of 2% year-on-year.

Some 600 buy-to-let mortgaged properties were repossessed in the fourth quarter of 2017, which was unchanged from the previous quarter.

The figures suggest that more landlords may be starting to struggle financially, following a series of tax changes, including the introduction of the 3% stamp duty surcharge for additional property purchases in April 2016 and the existing phasing out of income tax relief for landlords.

Recent research found that one in five landlords plan to reduce the number of properties in their portfolio over the next 12 months. 

David Cox, chief executive of ARLA Propertymark, said: “Landlords are facing burden after burden placed on them by the government, which is significantly increasing financial compliance requirements.

“This is, in turn, causing landlords to fall into financial difficulties.”

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