Buy to let mortgage arrears down in Q1

UK landlords are better off financially as total mortgage arrears and repossessions are down in the first three months of the year

The latest figures from the Council of Mortgage Lenders (CML) reveals that declines were noticed in all arrears bands, including across both buy to let and owner occupier lending.

1.03 per cent of all mortgages were found to have arrears equating to more than 2.5 per cent of the total mortgage balance in Q1 2015 compared to 1.05 per cent for Q4 2014 and 1.24 per cent for Q1 2014.

It means 113,900 loans are in arrears, of which only 24,400 are classed as being in severe arrears at more than ten per cent of the balance – just 0.22 per cent of all mortgages.

This marks the smallest proportion and number of mortgages in the most serious band since 2008, providing a positive outlook for the market.

Understanding payments is an essential part of any buy to let deal as landlords will need to know both what they can afford and what any potential costs are likely to be.

The Mortgages for Business buy to let mortgage calculator can aid with these calculations so that anyone considering buy to let is fully aware of the situation they are likely to face.

Fewer repossessions made in Q1

Repossessions were also down to 0.03 per cent in the first quarter of this year; falling from 0.04 per cent at the end of 2014 and 0.06 per cent for the same period a year ago.

In actual numbers, 3,100 properties were repossessed which was considerably lower than the 4,200 reported in Q4 2014 and the 6,400 from 12 months ago.

CML Director General Paul Smee warned against complacency in the market but added that the “underlying picture continues to be one of improvement”.

He added that anyone experiencing problems should contact their lender and that taking possession of a property is very much a “last resort”.

The number of second charge mortgage repossessions also fell by 45.3 per cent in the first quarter of this year, according to the Finance and Leasing Association.