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.

Seek advice

Charities such as the Consumer Credit Counselling Service ( and Citizens Advice ( 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.

Arts and Entertainment
a clockwork orange, stanley kubrick
The Tesco Hudl2: An exceptional Android tablet that's powerful, well-built and outstanding value

Life and Style
food + drinkAuthor DBC Pierre presents his guide to the morning after
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas