Home Recent Landlord News Experts sound rental crisis warning as buy-to-let repossessions jump 40% and a THIRD of all landlords look to sell in the next year

Experts sound rental crisis warning as buy-to-let repossessions jump 40% and a THIRD of all landlords look to sell in the next year

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The health of Britain’s private rental sector may be deteriorating, experts warn, as more landlords plan to leave the market and official figures signal a spike in repossessions. housing market on decline 2019

  1. Some 800 landlords had their property repossessed in the third quarter of 2019
  2. This is a 40 per cent rise on the 570 repossessed in the same period last year 
  3. Overall arrears have fallen slightly, while serious arrears have risen by 9 per cent
  4. A third of landlords plan to sell at least one property over the next 12 months 

The health of Britain’s private rental sector may be deteriorating, experts warn, as more landlords plan to leave the market and official figures signal a spike in repossessions.

Figures released this week from banking trade body UK Finance revealed a 40 per cent rise in buy-to-let repossessions on last year.

Some 800 buy-to-let mortgaged properties were taken into possession in the third quarter of 2019, compared to 570 in the same quarter of the previous year.

Meanwhile, there were 4,550 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2019, five per cent fewer than in the same quarter of the previous year.

While the number of landlords in arrears of between 5 per cent and 7.5 per cent of the outstanding balance also fell by 21 per cent over the year, the number of those in more serious arrears of between 7.5 and 10 per cent grew by 9 per cent.

The number of landlords in arrears over 10 per cent of the outstanding balance fell by 1 per cent, the UK Finance figures showed.

The banking trade body said the uptick in repossessions was ‘driven in part by a backlog of historic cases’.

Two years ago the city regulator changed the rules on how lenders have to calculate how much a borrower owes the lender each month if they fall into arrears.

UK Finance says this has led to lenders reviewing a large number of cases on an individual basis and applying for repossession ‘only when all other options have been exhausted’.

This, it claims, accounts for the backlog which it now says has caused the sudden uptick in repossessions.

Landlords themselves take a different view, however.

David Smith, of trade body the Residential Landlords Association, said: ‘Repossessions for mortgage arrears take place for many different reasons.

‘Mortgage interest relief changes, which are now almost fully implemented, the increasing cost of regulation and the ever increasing time to repossess a property are all major factors.’

‘Since most repossessions of this kind lead to tenants being evicted it is vital that the next government actively supports the majority of landlords doing a good job to provide the homes to rent the country needs.

‘If we want to develop long-term tenancy models we need also to support landlords to stay in the market long term.’

A third of landlords are looking to sell

Separate figures have revealed that increasing numbers of property investors look set to sell up in the face of falling profits.

A wide ranging study of around 2,000 landlord by the RLA has found that a third of private landlords are looking to sell at least one property over the next year.

Just 13 per cent plan to purchase at least one property to rent out compared with 18 per cent two years ago.

The chief reasons given by landlords causing them to sell up are recent tax changes which are adding to increased costs, the RLA said.

Smith said: ‘We warned the government that the tax increases they have imposed on landlords would be counter-productive and these figures show how right we were.

‘All they are achieving is driving landlords to leave the market, damaging investment and making it more difficult for tenants to find somewhere suitable to live.

‘Whoever is in government following the election needs to completely change the approach and start to support good landlords to encourage them to invest to meet the rising demand for rented housing.’

What’s costing buy-to-let-investors?

An August report from the Royal Institution of Chartered Surveyors found that the number of new landlords entering the market has been in decline for 13 quarters, or three and a bit years.

Multiple tax and regulatory changes have hit the market since 2016, including the introduction of a 3 per cent surcharge in stamp duty on buy-to-let purchases and the phased reduction of mortgage interest tax relief.

The number of ‘accidental’ landlords entering the market is also on the decline for the first time in half a decade.

So-called accidental landlords are those who didn’t buy a property with the intention of letting it out, but who have since ended up doing so – often either because they cannot sell and need to move, or decide to buy a new home and hold on to a property as an investment.

Currently around one in every 14 landlords falls into this category, but they have been squeezed by tax changes, including a blow on capital gains tax due to come into force in April next year.

Source: Daily Mail

Author: Will Kirkman

Date: 21st of November 2019

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