The number of buy-to-let mortgaged properties repossessed in the third quarter of 2019 is reportedly up compared to previous annual figures. So how as a landlord can you work to prevent increasing this statistic with your own property?
Trade association UKFinance have released new data that indicates there has been a 40% leap in repossessions on buy-to-let mortgaged properties in July-September 2019, up from the previous annual period.
The increase in landlords losing their homes has happened despite continued low mortgage rates generally. UK Finance said the recent increase in repossessions has been partly driven by a backlog of older cases being processed in line with the latest regulatory requirements.
The data goes on to show that there were 4,550 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in Q3 ‘19; up 5% year-on-year. Meanwhile, the number of landlords in arrears of between 5% and 7.5% of the outstanding balance fell by 21% over the year, however, the number of those in more serious arrears of between 7.5% and 10% shot up by 9%.
Repossessions for mortgage arrears take place for a number of different reasons:
- Mortgage interest relief changes
- Increasing costs of implementing new regulation changes
- Increasing amount of time to repossess a property, particularly if a tenant is growing their arrears.
These types of repossessions not only leave you as a landlord considerably out of pocket, but the chances are they will also leave your tenant without a home. Whilst we believe that the next Government need to do everything in their power to support legislation abiding landlords in providing the support and homes the country needs, it remains to be seen if the pitched manifestos, particularly when it comes to housing, comes to light.
So as a landlord, what can you do to combat having your investment property repossessed?
Communication is key between all parties, particularly when it comes to setting the standards for your tenants to pay rent. Ultimately if they aren’t paying the rent, they are living in your rental property free of charge whilst you foot the bill. Failure to foot this bill opens the doors to the repossession of your property. It is vital therefore that you know when and how your mortgage needs to be paid, and ensuring this balance is in your account in good time before the date is due.
From the tenant side of matters, ensuring you have a tenant who knows how to not only respect your investment property, but also you and your needs to live as well, then issues surrounding a reposession will be minimal. Effective communication with a tenant to secure a long-lasting, happy and healthy tenancy are crucial.
Through effective property management, this level of communication comes as standard with your tenants and your property being cared for by us as if they were your own. For more information on how we can keep your rental property well away from the gates of repossession, give us a call on 0161 883 2525.