BTL mortgage arrears double in a year as landlords face higher costs

BTL mortgage arrears double in a year as landlords face higher costs

0:01 AM, 4th December 2023, About 3 months ago

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Landlords are feeling the squeeze from rising mortgage rates and energy bills, as new research shows that buy to let arrears cases have doubled in a year.

According to Octane Capital, a specialist property lending firm, there were 11,540 BTL mortgages in arrears of at least 2.5% of the balance in the third quarter of 2023.

This is a 100.3% increase from the same period in 2022, when there were only 5,760 cases.

And it is the fourth consecutive quarter that buy to let arrears cases have risen, with the latest figure being a 28.8% jump from the second quarter of 2023.

‘Arrears cases have more than doubled’

Octane’s chief executive, Jonathan Samuels, said: “Tough conditions in 2023 have finally filtered through to landlords, as arrears cases have more than doubled year-on-year.

“While landlords are usually better placed than homeowners in riding out times of trouble, investors still have to price rents according to the market rate, so it depends on the region whether they’ve been able to fully absorb rising costs with higher rents.”

He added: “There’s a tricky balancing act when it comes to hiking rents, as steep rises risk alienating existing tenants and resulting in a void period, negating any benefit.

“The good news for landlords who are struggling is the period of escalating interest rates appears to be over, as steadier inflation means the Bank of England has less of a need to increase the base rate again, which could filter through to increasingly competitive mortgage rates.”

Buy to let loans in arrears

Octane Capital analysed data from the start of 2019 to the present day and found that the proportion of total buy to let loans in arrears has also doubled from 0.28% in Q3 2022 to 0.57% in Q3 2023.

The firm said that while many landlords have been able to cope with the higher costs, some have been hit hard, especially in regions with a strong supply of rentals.

And with BTL mortgage lenders lowering their rates means landlords will benefit from increasing competition between mortgage lenders for business.

The firm also highlights that while some landlords are struggling with higher costs, homeowners with a residential mortgage are also finding things tough with 1% of borrowers in mortgage arrears.


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