Buy-to-let landlords hit hard by recession
Number unable to keep up with their mortgage payments doubles to 27,000
The number of buy-to-let landlords unable to keep up payments on their mortgages more than doubled during the second half of last year, hitting record highs of almost 27,000.
Meanwhile, the number of repossessions of privately owned homes also leapt – finishing the year up more than 55 per cent on 2007 at 40,000.
The figures, published by the Council of Mortgage Lenders (CML) yesterday, are the latest indication of the extent of the collapse in the UK economy during the second half of last year, as unemployment rose, house prices slumped and GDP growth moved into negative territory.
The buy-to-let sector has been the hardest hit over the past year. The number of landlords who are three months or more behind on their mortgage payments rose by 257 per cent between the end of 2007 and the end of 2008, as landlords failed to secure the rents they needed to meet their loan payments. New lending in the buy-to-let sector has also plummeted, falling by 56 per cent in the final quarter of last year. Although repossessions of private homes increased during the second half of the year, the rise was not as fast as some had feared.
The Government introduced new rules towards the end of 2008, pressuring lenders to give borrowers more time if they couldn’t keep up mortgage payments. This is believed to have helped keep the number of repossessions down, although the Government’s Homeowner Mortgage Support Scheme – which was also announced last year, has yet to be put into place. It is expected to open in April.
Economists and politicians claim that the Government needs to do more if it is to stem the rise in repossessions. “Deep economic contraction, sharply rising unemployment, high debt levels, substantially lower equity and house prices, and more and more people being trapped in negative equity will exact an increasing toll on individuals over the coming months,” said Howard Archer, chief UK economist at the consultants Global Insight.
“While the substantial cuts in interest rates by the Bank of England will obviously help some people, they are likely to be insufficient to save many from insolvency and losing their houses. Government measures to help homeowners in trouble are also likely to have only a limited impact,” he said. “The many people who had to stretch themselves to the absolute limit to get into the housing market in recent years are particularly vulnerable. The more that house prices fall, the more people will be trapped with negative equity.”
In the private housing market, the statistics showed a jump in the number of voluntary possessions – where owners simply hand over their keys to the mortgage company. The number of such voluntary possessions rose 65 per cent to 4,630.
But the CML director general, Michael Coogan, urged borrowers to contact their lender and ask for support, rather than giving up once they run into troubles. “Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests,” he said. “We know the plethora of schemes and initiatives is daunting, and we are working closely with government and advice agencies to try to simplify the information available, and ensure that those borrowers who may qualify for help get access to the information and advice that they need at the right time.”
The Liberal Democrats blamed the Government for the rise in repossessions, accusing Gordon Brown of “sitting on his hands”. “The much- publicised Homeowner Mortgage Support Scheme announced last year has not yet helped a single family in trouble,” said Nick Clegg, the leader. “The Prime Minister’s wasteful complacency means that millions of extra families could be added to already full social housing lists.
“If the Government was serious about stemming the tide of repossessions, it would give courts the power to ensure repossession is the absolute last resort and remove the barriers to allow councils to invest in social housing.”
What to do if you can’t meet your payments
Talk to your lender
The Government has been putting pressure on banks and building societies to go easy on borrowers who are struggling – and the bank is more likely to give you a break if you call them as soon as you know you are going to miss a payment. Try not to wait until after the event. Ask your lender to let you have a month or two off your payments, or to make smaller payments. They’re more likely to say yes if you can convince them that a break will help you get back on track.
Charities such as the Consumer Credit Counselling Service ( www.cccs.org.uk) and Citizens Advice ( www.citizensadvice.org.uk) provide free advice for people struggling with their loan payments. If you haven’t managed to persuade your lender to reduce your payments, or to give you a break, organisations such as the CCCS can talk to your lender on your behalf. They can also help you put a more manageable payment plan together for all your loans – to help you get back on a stable financial footing.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Sales of the tablet are set to fall again, say analysts
Met Police confirm there was a 'minor disturbance' and that no-one was arrested
George Lucas criticises the major Hollywood film studios
Does Chris Grayling realise what a vague concept he is dealing with?
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
Parties threaten resort's image as a family destination
I Am Bread could actually be a challenging and nuanced title
- 1 Indian footballer Peter Biaksangzuala dies after injuring spine doing somersault celebration
- 2 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 3 Banksy arrest hoax: Internet duped by fake report claiming that the street artist's identity has been revealed
- 4 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 5 Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver allegedly kicks gay couple off for kissing
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
iJobs Money & Business
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village