Rental arrears and repossessions fall in Q1 of 2016

According to the most recent report from the Council of Mortgage Lenders (CML), repossessions in the first quarter of 2016 fell to their lowest on record.

Data from the report shows repossessions fell to 2,100, with 1,500 home-owner properties and 600 buy-to-let.

Should this rate continue during 2016, this would put the yearly number of repossessions at 8,400.

Falls

In addition, mortgage arrears continued to drop. For the first time in more than ten years, the number of mortgages in arrears of 2.5% or more dipped below the 100,000 mark.

There were 96,200 loans in arrears at the end of March, falling from 101,700 recorded at the end of December. What’s more, this was significantly down on the 111,200 recorded in the first quarter of 2015.

The decline in mortgage arrears and repossessions in recent years underlines the positivity surrounding the private rental sector. However, further data from the Ministry of Justice shows that eviction rates are much higher.

Statistics show that there were 42, 728 rental evictions in England and Wales by county court bailiffs in 2015. This was against just 5,594 mortgaged property repossessions by county court bailiffs.

Experiences

A more detailed look at the CML data highlights experience in both the home-owner mortgage market and the buy-to-let market. Arrears rates are greater amongst home-owners than buy-to-let landlords, but the repossession rate is less. Lenders obviously look to avoid repossessions to allow home-owners breathing space. However, many landlords look to protect their position more quickly on buy-to-let as tenants move on.

CML director general Paul Smee commented, ‘we cannot completely avoid the risk of any individual household experiencing arrears or repossession. But lenders continue to work very effectively to help their borrowers through periods of difficulty when they do occur and borrowers should be reassured that most cases of arrears can be resolved and will not lead to repossession.’[1]

Smee believes, ‘the key to dealing with difficulty is to tackle it early and to communicate with your lender as soon as you think you may be facing problems.’[1]

[1] http://www.propertyreporter.co.uk/property/repossessions-and-arrears-continue-to-fall.html