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Buy-to-let arrears rate rockets 50%
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The number of landlords falling behind on their mortgage repayments has soared by 50% as the buy-to-let boom turns to bust.
According to Council of Mortgage Lenders (CML) data, the arrears rate in the buy-to-let sector was 1.58%, exceeding the whole market rate for the first time since CML records began in 1998.
The CML figures also showed home repossessions in the third quarter were up 12% compared to the previous three months, to 11,300, and the number of borrowers who were more than three months in arrears also rose, by 8% to 168,000.
The number of buy-to-let borrowers falling into arrears was up to 18,000 in the three months to the end of September, from 12,000 in the previous quarter.
Landlords were finding it increasingly difficult to pay their loans because of falling rents and over-supply in some areas, according to the CML.
The CML said the traditional "exit strategy" of selling up if they get into difficulties has been curtailed as buyers dry up.
CML figures showed 900 properties owned by buy-to-let investors were repossessed in the third quarter, the same as in the first and second quarters of the year. But this resilience was "unlikely to be maintained" in the future, the CML said.
The Royal Institution of Chartered Surveyors (RICS) said the increased rate of buy-to-let borrowers going into arrears on their mortgages was "ominous".
Simon Rubinsohn, RICS chief economist, said: "The latest RICS survey of the residential lettings market shows rents are now declining which, if persistent, could exacerbate the pain in this sector."
As unemployment rises and low-interest rates come to an end, more people have struggled to meet their mortgage repayments. The rise in the number of households falling behind on their mortgages was larger-than-expected, prompting the CML to warn that "in a worsening economy, the number of households in arrears by the end of the year is likely to exceed the previous forecast of 170,000".
