93% jump in landlords falling into mortgage arrears

property investing

The number of landlords falling into arrears has climbed by 93% in a single year, research from lender Octane Capital has revealed.

This was that far higher than the 22% increase seen in homeowner arrears.

However eight times more homeowners fell into arrears in 2023 than landlords – so this development merely means the gap is closing between the two.

Jonathan Samuels, chief executive of Octane Capital, said: “Interest rates remain at their highest since 2008 and it’s clear that while we haven’t seen the base rate increase since August of last year, both landlords and homeowners alike are struggling to keep pace with the increased cost of their mortgage.

“While homeowners are more likely to fall behind on their payments, the sharp increase in landlord arrears is a worrying sign for the rental sector.

“There’s already a desperate shortage of rental homes available to serve the huge demand from tenants. An increase in buy-to-let arrears suggests that this issue could be set to intensify as landlords offload their portfolios to pay their debts, or worse, see them repossessed.”

Some 13,570 landlords are estimated to have fallen into arrears on their mortgage during the final quarter of last year.

While this equates to just 0.7% of total buy-to-let loans, it’s by far both the highest number of arrears seen over the last five years, as well as the highest proportion of total loans.

As a result, a total of 41,090 landlords fell into arrears on their mortgage in 2023, an average of 10,273 per quarter, marking a 76% year on year jump versus 2022 when arrears had shown signs of easing with a -4.1% annual decline (2021 vs 2022).