A growing number of landlords are ending up in mortgage arrears and having their rental properties repossessed.

Data from Uswitch reveals that 6,070 landlords behind on their mortgage in Q1 2024 were in arrears between 2-2.5% of their outstanding balance – up from 2,820 in Q1 2021. This represents 5% of all mortgage arrears.  

The total number of buy-to-let mortgages in arrears have more than doubled (+119%) since the start of 2021 to a peak of 13,750 in Q1 2024.

According to mortgage possession statistics from UK Finance, 1,470 properties were taken into possession in Q1 2024, with 41% of these from buy-to-let landlords. Since 2020, figures have more than tripled.

Income reduction

Lee Grandin (pictured) at Landlord Mortgages believes high rental demand means landlord mortgage arrears are unlikely to occur because the rent isn’t high enough but could be due to a reduction in income from a landlord’s occupation or other rising costs such as a home mortgage.

Lenders have typically needed a 25% equity in a BTL property so a landlord in financial difficulty could simply offload it, while strong house prices should mean few are in negative equity, he says  

“I suspect landlords see going into arrears as a short-term issue which will correct or they would simply sell up,” adds Grandin.

“Interest rate decreases will be helpful, but I don’t think they will have significant impact - -0.5% this year and maybe 1.5% over the next couple of years. While these decreases combined with wage inflation will tip things back in favour of the landlord, I suspect some will just feel they can’t wait, and landlords will continue to offload property.”

The average loan value on a BTL property purchase was just below £158,500 in March and about £149,000 for a BTL remortgage.