More Buy-to-Let Properties are Being Repossessed in the UK: What To Know

If you’re one of the landlords in the UK, this article is for you. Thousands of landlords are struggling now to keep their properties out of arrears with a rise in buy-to-let repossessions in the last quarter.  In the second quarter of 2024, mortgage arrears for landlords increased by 1% from the previous quarter, resulting in 13,570 cases.  

Key Statistics:

• Landlord Possession Claims: Drastically increased by 9% from 22,526 in the same period last year to 24,495  

• Repossessions: Skyrocketed 16% from 5,950 to 6,927  

• Mortgage Arrears: The total number of landlords behind on payment is now 13,570, a 1% increase from the previous quarter.  

Many landlords are in a dreadful situation due to higher interest rates. Those who borrowed more money from the bank now find it hard to keep up with their debt.  

Lenders’ repossessions are climbing back to levels seen before the pandemic arose. Mortgage and landlord possessions have now been at their highest since mid-2019.  

What’s Driving The Increase?

• Tax Changes: Landlords face potential tax increases, with concerns that the Chancellor may raise capital gains tax (CGT) in October. Recent changes reduced the top CGT rate from 28% to 24%, prompting many landlords to reconsider their exit strategies and sell their properties before potential tax hikes. Heather Powell, head of property at Blick Rothenberg, notes: “With the possibility of a CGT increase looming, many landlords are rethinking their investment and planning strategies and may choose to sell sooner to avoid higher taxes.” 

• Rising Borrowing Costs: Interest rates have been climbing since September 2022. The Bank of England’s rate hikes, starting in December 2023, have been a major factor. Although the Bank has halted further rate increases, current average fixed-rate mortgage deals for residential and buy-to-let loans remain above 5%, down from around 6.5% last summer. 

Looking Ahead

The rental market faces a hard-to-win future as more landlords might be forced to sell their properties or face repossessions. Although repossessions are increasing, the numbers are still below the level before the pandemic.  

Overall, the situation paints a struggling future for the UK rental market. Landlords are under financial pressure, and many wonder how to keep their properties out of arrears.  

Final Verdict

The current trend of rising repossession rates among UK landlords highlights the rental market’s challenges. With increasing mortgage arrears and dreadful property repossessions, many landlords will surely struggle to maintain their investment position. This situation is being worsened by borrowing costs and tax changes.  

Get Professional Support

By taking a proactive approach, such as seeking professional help on how to secure your investment for success, you can stay ahead of the curve. Our team of financial experts at Anros Consultancy is here to help.