Buy-to-let arrears cases double in a year – Octane Capital

Data shows a significant increase in cases of buy-to-let arrears over the past year, based on analysis from Octane Capital. Here are the key points:

  1. Arrears Doubling: Cases of buy-to-let arrears have doubled in a single year, reaching a record high of 11,540 in the third quarter of 2023. This is a 100.3% increase compared to the same period in 2022, which had 5,760 cases.
  2. Consecutive Quarterly Increases: Buy-to-let arrears cases have increased for four consecutive quarters, with the latest quarter experiencing a 28.8% rise between the second and third quarters of 2023.
  3. Factors Contributing to Arrears: The analysis suggests that while some landlords have been able to shield themselves from the impact of higher mortgage rates and energy costs, not every investor has been able to do so, especially in regions with a strong supply of rentals.
  4. Proportion of Loans in Arrears: The proportion of total buy-to-let loans in arrears has risen from 0.28% in Q3 2022 to 0.57% in Q3 2023, representing a year-on-year increase of 0.29%.
  5. Bank of England Base Rate: The text notes that the Bank of England base rate, which increased from 0.1% in December 2021 to 5.25% in August 2023, has been on hold since then. The recent fall in inflation to 4.6% in October is seen as evidence that the higher base rate has had the desired effect in curbing inflation.
  6. Future Mortgage Rate Changes: With the expectation that the period of escalating interest rates may be over, Octane Capital anticipates improved confidence in mortgage lenders. This could lead to mortgage rate cuts as lenders compete for business.
  7. Challenges for Landlords: Despite the potential relief in interest rates, the text highlights the challenging situation for landlords in 2023, with the balancing act of adjusting rents to cover rising costs while avoiding alienating existing tenants.

In summary, the analysis indicates a challenging environment for buy-to-let landlords, with a significant increase in arrears cases over the past year. While there may be some relief with the stability in the Bank of England base rate, landlords still face difficulties in managing rising costs and potential implications for rental prices.




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