Buy-to-let  

Hundreds of BTL properties repossessed

Hundreds of BTL properties repossessed

A total of 640 buy-to-let mortgaged properties were repossessed in Q1 2020, marking an 8 per cent rise on the same quarter last year, figures from UK Finance have shown.

The data, that was published last week (May 14), found despite the rise in BTL repossessions mortgage arrears remained low towards the beginning of the coronavirus crisis.

Meanwhile on homeowner mortgaged properties, the data showed a 23 per cent reduction in repossession numbers, from 1,390 in the first quarter last year to 1,070 in Q1 2020.

It also showed a relatively small increase in arrears with such mortgages with the vast majority being new arrears in March.

This was shortly before lenders offered payment holidays to borrowers experiencing financial issues due to the coronavirus. According to UK Finance, the level of arrears remained low by historical comparisons. 

UK Finance found a 6 per cent reduction in the number (72,380) of homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in Q1 2020, compared with the same quarter last year.

The data also showed a total of 4,420 BTL mortgages were in arrears of 2.5 per cent or more of the outstanding balance in Q1 2020, marking a 6 per cent decrease from the same quarter last year.

 

Jackie Bennett, UK Finance senior advisor for mortgages, said: “While the number of mortgages in arrears are down six per cent year-on-year for both homeowners and landlords, and the number of possessions down 23 per cent for homeowners, lenders know that coronavirus is currently causing financial difficulty for many customers.

“That’s why the banking and finance industry is working hard to support people during this difficult time, including providing more than 1.6m mortgage payment holidays and introducing a three-month moratorium on any possessions.”

Reducing numbers of arrears

Within the total 72,380 of homeowner mortgages in arrears of at least 2.5 per cent, just less than a third (30 per cent) had more significant arrears of at least 10 per cent of the outstanding balance. This represented a 6 per cent decrease from Q1 2019.

Additionally, within the total of 4,420 BTL mortgages in arrears of 2.5 per cent or more, there were 1,170 with arrears of at least 10 per cent of the outstanding balance. This marked a 3 per cent decrease from Q1 2019.

 

Dave Miller, client account manager at Spicerhaart Corporate Sales, said: “There remains a serious issue for the more than 22,000 homeowners with arrears of 10 per cent of their mortgage balance or more – a number that had been gradually falling before Covid-19 struck but still highly significant for the individuals and families involved.

“Although they will benefit in the short run from the cessation of possessions activity, the longer it goes on, the worse their position becomes.

“Most of those borrowers are unlikely to be in a better position to address those arrears after the payment holiday is ended, and both lenders and the government need to think through what the best approach is to helping people in that situation.”