ARLA’s Operation Manager, Ian Potter, said:

The fact that the number of reluctant landlords has dropped once again, and supported by the rise in demand for buy-to-let, suggests that movement is beginning to occur across the market. What remains key is that all landlords – reluctant or otherwise – are fully aware of their obligations to their tenants.

The Association’s research shows that 60% of its members’ offices reported property being rented out rather than sold during the third quarter of this year; a drop from 80% in the second quarter and 95% in the first quarter.

This data is supported by news from Residential Landlord that the number of enquiries regarding buy-to-let borrowing reached an all time high in the Mortgage Advice Drivers report for September.  Mortgage advice requested from the website was split as follows:

• First time buyer 51%
• Remortgage 34%
• Residential 26%
• Buy-to-let 17%

A case of watch this space?

The credit crunch has had a significant effect on buy-to-let landlords over the past 12 months: the number of landlords accruing more than 3 months of arrears doubled in the second half of 2008, hitting an incredible 27000 – this figure was almost 4 times higher than the 7,500 landlords with more than 3 months’ arrears towards the end of 2007.

The Council of Mortgage Lenders has also disclosed that 4000 homes on buy-to-let mortgages were repossessed in 2008, compared to 2000 in 2007; an increase of 50%. Although these figures sound alarming, it is important to bear in mind that these repossession figures represent around 0.4% of all active buy-to-let mortgages – there are 1.15 million such mortgages within the UK. In fact, around half of the buy-to-let mortgages in 2008 were take out by soundly-established landlords who took advantage of competitive interest rates to remortgage their properties.

However, it is impossible to deny that the number of buy-to-let landlords with mortgage arrears has risen sharply, and this is due to several factors. Like many private homeowners, landlords have been adversely affected by the rise in unemployment and the slump in house prices – many have found it hard to find tenants for their properties in order to repay the mortgage, or tenants in properties may fail to pay their rent as a result of losing their jobs.

Also, due to the current economic climate, rents have been driven down and both a fall in rent and a loss of tenants will undoubtedly affect a landlord’s ability to pay the mortgage (make sure you rent your property for the maximum possible rent). This leads to properties being repossessed, in turn meaning many tenants are evicted. Properites are also taking much longer to rent in the current economic climate – 70 days on average – and this means no rental income for landlords for several weeks.

Unfortunately, when credit was easily available and property prices exceedingly high, many people with no adequate experience thought entering the property market on a buy-to-let mortgage was a failproof way to make money in the form of a long-term investment – it is these inexperienced landlords that are struggling now.

They cannot sustain an empty property or properties and, in the current climate, may struggle to sell these properties quickly enough. Evicting tenants who are not paying their rent also takes time, again meaning no rental income for the property – this leads to arrears and subsequent repossession for some inexperienced landlords.

If you have a buy-to-let mortgage and are struggling with repayments, do not ignore it – seek help right away. Contact your lender to explain the situation (before the first missed payment, if possible) and they will be much more likely to offer help. They may offer you a payment holiday until your finances are in better order, or they may allow you to make reduced payments for a set period.

If you have a repayment mortgage, consider saving money by transferring to an interest only mortgage (most landlords have these). If you can prove your cashflow problems are only temporary, your lender is much more likely to agree to an amicable solution.

If you feel too nervous about approaching your lender yourself, seek the help of specialist debt agencies such as the Citizens’ Advice Bureau or the Credit Consumer Counselling Service (CCCS) – they can provide you with free invaluable advice and liase with your lender on your behalf, in order to try and reach a solution to your problem.

If you are coming to the end of your mortgage deal, you may be able to save money by taking advantage of the current extremely low base rate through remortgaging; even if your credit history prevents you from doing so, you may be able to save money by simply switching from a fixed rate to your lender’s SVR, taking into account the low interest rates at present.

Ellie Irwin of the National Landlords Association says;

“Undoubtedly, these are challenging times for landlords. However, professional landlords are better equipped to deal with rental arrears than smaller, ‘buy-to-let’ landlords.

Ensuring a property is competitively priced, marketing a property before tenants leave to avoid a void period, and keeping in regular contact with their tenants are all ways in which a landlord can avoid falling victim to the recession.”

Experienced landlords always have a contingency fund to cover lean periods, and this is a very sensible thing to have; when you do have tenants and are yielding good rent, save some of this in order to cope when your property is unlet or to pay for essential maintenance works.

It is natural when times are hard to look for ways to save money, but do not pennypinch in the wrong areas: for example, a letting agent may cost money but can help you find a tenant quickly in the event if your property being vacant and they also oversee the tenancy of your property. If you were to get rid of this service, you would be responsible for all this, adding more stress to an already stressful situation.

The Government has introduced a number of measures to help homeowners during the recession, yet these do not apply to those with buy-to-let mortgages (for example, the State Mortgage Rescue Scheme does not apply to second homes). Thus, the Government really needs to do more to help protect landlords from repossession.

In the meantime, if you get into trouble with your buy-to-let mortgage remember to contact a free debt advice charity and your lender as soon as possible.

UK house repossession statistics – the shocking truth

In this country property is currently enormously expensive, unaffordable for many people. Many housing market experts feel that the situation simply can’t be sustained and that house repossessions will keep rising.  The figures back up their fears… the latest UK government house repossession statistics are alarming.

The Government is hoping that the extension of free professional legal advice in county courts will result in 85% of repossession orders being shelved, giving people a breathing space to find ways to avoid repossession. The government has launched a comprehensive rescue package designed to support those under threat of losing their homes.

But home repossessions have increased every year since 2004, and they’re due to rise again during 2008. This year, the number of people predicted to fall into arrears with their mortgage is set to rocket by an estimated 8.6%.

Interest rate hikes don’t help house repossessions UK statistics. Until recently and the new 3% base rate, the credit crunch has led to a big increase in the cost of borrowing, meaning recent rate increases haven’t been passed on to the consumer. And inflation is on the up. Today’s house repossession statistics don’t give much room for optimism.

The Government’s most recent Quarterly Mortgage and Landlord Possession Statistics, released in May and covering the first quarter of 2008, don’t look good.

During the first quarter of this year around 40,000 mortgage possession claims were issued.

The report gives numbers of mortgage and landlord possession actions in the county courts of England and Wales during quarter one 2008. House repossession statistics:

• 38,688 claims were issued by UK lenders, a 7% increase on 2007.

• The number of home owners issued with eviction orders increased by 17% to just over 27,500.

• The CML (Council of Mortgage Lenders) has increased it’s forecast for 2008 UK repossessions to 45,000. But because the CML has been known to under-report, the actual figure might be as high as 70,000.

• The UK boasts an estimated 1 million buy to let mortgages, when ten years ago there were barely 20,000. Many of these are under threat as rental income slumps, and still more are on the verge of negative equity.

You can read the entire house repossessions UK report at: http://www.justice.gov.uk/publications/mortgatelandlordpossession.htm

More house repossession statistics: For information about properties being taken into possession, published twice a year by the Council of Mortgage Lenders (CML), visit cml.org.uk For the full Ministry of Justice report, visit: justice.gov.uk/publications/mortgatelandlordpossession.htm

House repossessions UK – the uncomfortable facts
Take a look at house repossessions. UK statistics tell a story… the housing boom is over. After more than a decade of galloping house prices and big, fast profits, the bubble is finally bursting. UK house repossessions are on the increase, house repossession statistics are worrying and the number of families and individuals at risk is rising. Inflation, fuel costs and interest rate hikes are starting to hit hard. But how is UK home repossession affecting your region?

House repossessions UK by region

• Bedfordshire 472, up 15% since the first quarter of 2007
• Cambridgeshire 494, up 17%
• Cheshire 782, up 14%
• Cleveland 607, up 17%
• Cumbria 270, up 13%
• Derbyshire, 536 up 17%
• Devon and Cornwall 825, up 15%
• Devon and Cornwall 825, up 15%
• Dorset 379, up 27%
• Durham 610, up 14%
• Dyfed Powys 294, up 37%
• Essex 1376, up 14%
• Gloucestershire 252, up 34%
• Greater Manchester 2697, up 25%
• Gwent 515, up 1%
• Hampshire and Isle of Wight 1043, up 9%
• Hertfordshire 493, up 14%
• Humberside 667, up 13%
• Kent 1366, up 1%
• Lancashire 1324, up 25%
• Leicestershire 539, up 18%
• Lincolnshire 501, up 32%
• Merseyside 1565, up 30%
• Norfolk 384, up 21%
• North Wales 566, up 44%
• North Yorkshire 360, up 17%
• Northamptonshire 658, up 27%
• Northumbria 1186, up 18%
• Nottinghamshire 1070, up 25%
• Somerset 772, up 21%
• South Wales 1327, up 18%
• South Yorkshire 1137, up 26%
• Staffordshire 820, up 11%
• Surrey 438, up 14%
• Sussex 817, up 18%
• Thames Valley 1160, up 13%
• Warwickshire 404, up 14%
• West Mercia 684, up 25%
• West Midlands 2946, up 23%
• West Yorkshire 1187, up 24%
• Wiltshire 378, up 21%

House repossessions UK – some alarming conclusions

• Only Kent, Gwent and Hampshire & Isle of Wight first quarter UK house repossession percentages fall into single figures.

• North Wales tops the pile with a huge 44% increase in mortgage possession claims on the same period – quarter 1 – of 2007.

• Dyfed Powys comes a close second with a 37% increase on the same period in 2007.

• Merseyside comes third with 30% more repossessions during quarter one of this year.

Source: Ministry of Justice website. Read the full report at: http://www.justice.gov.uk/publications/mortgatelandlordpossession.htm

Several buy-to-let clubs are striking sale-and-rent-back deals with desperate homeowners, encouraging members to profit from rising repossessions.

Investors Chronicle publishes an investigation today showing there are more than 20 groups in the UK using free seminars to promote the practice.

The method is being used despite assurances from the government that the Financial Services Authority will regulate the sale-and-rent-back sector.

07/11/08 Financial Times

HomeMove.co.uk – The UK’s independent property help portal.