Buy-to-let repossessions at record high

Posted on August 10, 2012

Buy-to-let mortgage repossessions have hit a record high. But banks and building societies are lending more than ever before to buy-to-let investors, according to a Financial Times analysis of data from the Council of Mortgage Lenders.

There were 18,100 repossessions in the first half of 2012, of which 19 per cent were buy-to-let, up from under 10 per cent in early 2009. By contrast the number of owner-occupied homes being repossessed has been in decline since the start of 2009.

    The repossession rate – the total number of repossessions in relation to the total number of mortgages – topped 0.24 per cent for the first time in the buy-to-let market, while the repossession rate for owner-occupied properties was just 0.15 per cent, down from 0.22 per cent at the start of 2009.

    Buy-to-let lending has grown from 5.5 per cent of the mortgage market in 2005 to 12.6 per cent now. Loans on buy-to-let properties increased 14 per cent year-on-year, with £3.9bn lent in the three months to June. The total lent on buy-to-let properties has topped £160bn, driven by demand for rental property as potential buyers find it harder to get mortgages than before the credit crunch.

    Neal Hudson, a researcher at Savills, said factors contributing to the rise in buy-to-let repossessions included a lack of forbearance from lenders and higher mortgage rates.

    Buy-to-let properties also tended to incur higher levels of arrears because tenants defaulting and landlords not making provision for unexpected maintenance costs, Savills said.

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