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UK finance mortgage arrears and possessions Aug 23

ended 10. August 2023

UK Finance has just published its mortgage arrears & possessions update for Q2 2023, showing, among other things, that:

  • There were 8,980 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 28 per cent greater than in the previous quarter, and that
  • There were 81,900 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 7 per cent greater than in the previous quarter.

Free UK newswire, Newspage, sought the views of brokers and property experts, which can be found below and will keep appearing until 11am.

8 responses from the Newspage community

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Joe Stallard0
Director and Advisor at House and Holiday Home Mortgages
The struggles continue for landlords. In fact, it's downright brutal. Though the numbers are still relatively small, the rise in properties being taken into possession is a worrying sign, even if not entirely surprising given recent legislation changes that have come down hard on landlords. We mustn't forget the knock-on effect this has on tenants. Punishing landlords this harshly will reduce the amount of good quality rental property available, which will increase rents and competition for those that don't want to, or can't yet, buy.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
It seems that an increasing number of buy-to-let landlords are encountering serious financial challenges. Beyond escalating borrowing expenses, unpaid rents stand as a significant factor. Moreover, when landlords aim to offload their properties, the timing couldn't be less favourable in recent memory. Even at auctions, properties remain unsold. Regrettably, the mortgage charter offers no assistance to these landlords, despite their essential role in supplying housing in the private rental market. The surge in arrears was bound to happen and the outlook for many landlords is bleak.
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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
Landlords are particularly exposed as, for the most part, they rely on rent receipts to meet their mortgage payments. Tenants are feeling the pain every step of the way amid the cost of living crisis and rent increases to meet landlords' mortgage costs. This is the tip of the iceberg, and very likely worse will come. Landlords would be well served to contact their tenants to discuss their situations and keep communications open should things worsen. Mortgage arrears appear to be rising sharply, which again is unsurprising. Sadly, I feel this number will continue to rise as mortgage holders fail to adjust, plan or are simply unable to cope with the costs of living in their current homes. For those about to have their fixed rates expire, or are due to remortgage next year, get a budget planner out, look at income and expenditure and start planning now. As always, talk to a broker.
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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
This research and data are showing that the hikes in the base rate by the Bank of England are pushing more homeowners into arrears now that the impact of the rate increases is starting to trickle through as more borrowers come off their low fixed rates. Tenants struggling with keeping up with rent is no surprise given the challenges across all their household costs from food and energy meaning something has to give. There are further challenges for landlords with their increased cost of buy-to-let mortgages and rent being missed by tenants.
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Bob SinghVerified
Founder at Chess Mortgages
This is not good news. Couple this with today's RICS gloomy forecast and we have a winter of discontent to look forward to. Tenants are just like us, they have had to cope with the cost of living crisis, too. Rising living costs and rising rents mean that their budgets are also squeezed leading to them being unable to pay their rents. Tenants do not usually take financial advice let alone take any form of income protection and landlords don’t always take rent protection insurance. So these figures should make both categories wake up and smell the coffee. Pro-tenant laws encourage tenants to be blasé about keeping up with rental payments. If rent arrears were recorded on credit bureaux then maybe this would make tenants take matters seriously Landlords on the other hand need to retain sufficient liquidity to be able to cope with such shocks if they are to keep their credit files clean. Many stretch too much in the hope that the rent will keep coming in. Risky.
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Kundan BhaduriVerified
Property Developer and Portfolio Landlord at The Kushman Group
As markets continue to evolve, shrewd investors are on the lookout for unique opportunities that arise in response to changing economic conditions. Despite this latest data on arrears and repossessions in the market, which is sad news to read, seasoned portfolio landlords and developers see potential where others see a risk. While these figures might sound alarming at first glance, they offer an opportunity for savvy investors to enter the market at favourable terms. Here's why:

1. Excellent new properties coming to the market offering an entry point for investors to take a position
2. You can create long-term value through these short-term fluctuations
3. Yields will be improving as prices dip
4. You can now negotiate more favourable deals than in the past 15 years
5. A diversified portfolio is key to managing risk. Bullish investors are using this opportunity to diversify their holdings, taking advantage of lower prices and potentially higher returns in the future.
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Graham CoxVerified
Director at Bridging Hub
The increase in landlord repossessions is unsurprising, as many are highly leveraged and refinancing costs have soared. Some will have pushed up rents to compensate. However, increasing void periods and tenants in arrears due to the cost of living has left overexposed landlords in difficulty.
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Jamie LennoxVerified
Director at Dimora Mortgages
This data is alarming and certainly heading in a direction we wouldn't want to see. The main concern is that this is only the tip of the iceberg, The data so far won't have factored in the customer who will now be landing on the sky-high rates we've been experiencing in the past few weeks. The real damage is likely to unravel in 2024.