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Tuesday, May 28, 2024

Alarming surge in landlord possession claims and repossessions, reported

New research from LandlordBuyer found that in the last quarter of 2023, there were 23,282 landlord possession claims and 6,649 repossessions in England and Wales.

Comparing the last quarter of 2022 to the last quarter of 2023:

  • Landlord possession claims increased from 20,457 to 23,382 
  • Orders increased from 16,145 to 18,003 
  • Warrants increased from 8,778 to 9,833
  • Repossessions increased from 5,427 to 6,649 

These figures aren’t just exclusive to the rental market, there has also been an increase in UK mortgage claims and warrants:

  • Mortgage possession claims increased from 3,163 to 4,384 
  • Orders increased from 2,482 to 2,702 
  • Warrants increased from 2,131 to 2,200 
  • Repossessions by county court bailiffs decreased from 735 to 593 (19%). 

LandlordBuyer managing director, Jason Harris-Cohen, said: “I don’t think any of the LandlordBuyer team was surprised to see the rate of repossessions, warrants and claims increase.

“Despite the average UK private rent increasing annually by 9%, landlord costs have risen exponentially, which has created a negative disparity. The most worrying element has been mortgage rates. Landlords coming off fixed-rate, buy-to-let mortgages have found new rates are double what they may have fixed in to five years ago. 

“Refinancing in the buy-to-let sector now means very slim margins to work with and even heightened rents can’t make up the short fall – especially as insurance policies, maintenance and materials have all risen in cost. It’s a simple case of the rent being received doesn’t always fully cover mortgage repayments.”

In February this year, UK Finance figures found there was an 11% rise in repossessions of buy-to-let properties. It also found homeowners in mortgage arrears increased by 7%.

Will the rate of landlord repossessions continue to rise?

“Potentially,” says Jason.

“The industry is still focused on the Renters’ Reform Bill and how landlords may have to adapt. We know the Bill includes the application of a Decent Homes Standard in the private rental sector, and finance may have to be found for improvements. 

“If landlords’ only way of raising money for improvements is to remortgage, they will potentially overextend themselves and tread a fine line between profit and loss. It only takes an unexpected turn in the economy for rents to fall, tenant demand to decrease, and mortgage rates to rise. We really need the stars to align to see a fall in repossessions.” 

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