Buy to let arrears fall 22% as possessions rise

Landlords’ buy to let mortgage arrears fell 22% over the year, although possessions rose in the latest quarter.

UK Finance recorded 8,170 buy to let mortgages in arrears in the third quarter of 2026, down 3% on the previous three months.

Lenders took possession of 690 buy to let properties, a quarterly increase of 10%.

However, that was still 23% below the number recorded a year earlier.

Buy to let arrears

Mortgages in arrears accounted for 0.43% of all buy to let mortgages during the quarter.

The number in the lightest arrears band increased modestly compared with the previous three months.

Even so, that figure remained 18% below its level a year earlier.

Across all other arrears bands, numbers fell in the buy to let sector.

Mortgage repayment pressures

James Tatch, the head of analytics at UK Finance, said: “The latest arrears and possessions data shows that borrowers are continuing to manage their mortgage payments despite rising cost pressures.

“With homeowner arrears falling for a tenth consecutive quarter, and possessions well below historic highs, the overall picture is one of a resilient mortgage market, with the vast majority of customers continuing to make their repayments on time.”

He added: “Despite the positive news on falling arrears, we know customers are currently dealing with a rising cost of living, as well as the impact the war in the Middle East is having on interest rates.”

Homeowner mortgage arrears

Homeowner mortgages in arrears fell for the tenth consecutive quarter to 76,080, down 2% on the quarter and 10% over the year.

Total possessions across both sectors rose from 1,780 to 1,840, but were 20% below the same quarter in 2025, marking a second consecutive annual fall.

Within that total, homeowner possessions were unchanged on the quarter and down 17% over the year, remaining at their lowest level since the fourth quarter of 2024.

Property sector reaction to UK Finance data

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “Despite significant pressure on household finances and the high cost of living, the number of homeowner mortgages in arrears fell for the tenth consecutive quarter.

“However, there was an increase on the previous quarter in landlords in the ‘lightest arrears’ band, perhaps suggesting that new legislation such as the Renters’ Rights Act is making for a tougher environment for investors.

“Worryingly, possession numbers for homeowners increased slightly on the second quarter’s figures but to put these into context, they were down on the same quarter in 2025, and the numbers remain lower than historical peaks. Buy-to-let possessions also increased on the quarter but remained lower than a year ago.

“Given higher mortgage rates and the potential of further base rate increases, the figures are encouraging overall as the vast majority of customers are paying their mortgage on time and those who are struggling appear to be getting support from lenders.”

Ian Harris, the president of NAEA Propertymark (National Association of Estate Agents), said: “It’s encouraging to see mortgage arrears continuing to fall for both homeowners and buy to let landlords, with property possessions also significantly lower than a year ago.

“This demonstrates the resilience of borrowers despite ongoing economic uncertainty and cost-of-living pressures.

“However, affordability remains a key challenge for the housing market.

“Mortgage costs and wider household expenditure continue to influence buyer confidence and people’s ability to move home.

“At the same time, maintaining confidence in property as a long-term investment is important, with responsible landlord investment playing a valuable role in supporting housing supply.”