Worrying rise in Buy-to-let mortgage arrears

Any landlord with a buy-to-let property biggest challenge is to pay the monthly mortgage bill. That's fine and dandy when the property is let but when the property becomes empty or the tenants stop paying rent then many landlords will need to draw on their own resources to keep the payments up.

The tough times resulting from the current depression are clearly putting a strain on some landlords finances according to latest figures on mortgage arrears produced by Moodys the credit rating company.

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They show a huge jump in buy-to-let arrears amongst leading securitisations of buy-to-let mortgages. Securitisation is the process where loans in this case buy-to-let mortgages were bundled up by a lender and then sold to financial institutions as 'packaged investments'. The figures reported in the FT
show that 90 day arrears are up from to 3.55% in the first quarter of 09 up from 0.92% in the same time last year. The sharpest rise was at Aire Valley Master Trust, the securitisation vehicle of Bradford & Bingley. Here serious arrears past 90 days jumped to 4.9 per cent in the first quarter from 3.44 per cent in the fourth quarter of last year.

Repossessions in the buy-to-let market are still relatively low at 0.18% in the first quarter compared to 0.13% in the same period in 08.

Chris Horne of leading landlord website Property Hawk comments: "The worrying aspect for many landlords and those in the industry is that mortgage arrears are a leading indicator for repossessions."

"Lenders generally will not take action for repossession until arrears are 90 days or more. The latest figures all point to a big jump in the number of buy-to-let repossessions in the coming months."

He urges landlords not just to 'throw in the towel' if they get into difficulties.

"Its no good thinking that by walking away from your buy-to-let property that this will be the end of your problems. The debts will remain and you as the landlord will be still liable for them even if the property is sold."

He advises landlords to monitor tenants carefully for non-payment of rent

and where they do get behind on their mortgage payments to be pro-active and get advice.



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