Buy-to-let repossessions rise

10/06/2009

The buy-to-let market has been hit hardest by the economic downturn, it has been suggested.

Stats from the Council of Mortgage Lenders (CML) show that buy-to-let loans account for just six per cent of the market.

Last year, this total stood at 12 per cent.

Falls in house prices have affected landlords who own several properties more than homeowners who just own one - with many becoming trapped in their mortgage deals and going into large amounts of "negative equity" in the downturn.

This has led to a spike in repossessions numbers, with landlords losing 4,100 properties over the first three months of the year according to new BBC research.

Included in this total are 2,400 cases where the mortgage lenders have taken on a "receiver of rent" to replace the landlord who has had their property repossessed - an eightfold increase over 2008.

Therefore, tenants are not affected by the legal proceedings and can continue living in their accommodation as normal.

Commenting on the trends, David Elms, chief executive of financial website Unbiased.co.uk, said: "The years of the booming property market made investing in bricks and mortar very attractive. But unfortunately this boom couldn't continue forever and those [who] invested in the buy-to-let property market may now be facing losses due to the current economic climate.

"Furthermore, the number of buy-to-let mortgages on offer has greatly reduced, meaning those lenders remaining in the buy-to-let space have tightened their lending criteria making funding even harder to find for potential landlords."

Tags; Housing Debt and Bills, Young Family Finances, Recent Graduate Debt,

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