» Read the complete article

New buy to let lending fell for the sixth consecutive quarter in the first three months of 2009, a reflection of the ongoing, extremely challenging funding conditions as well as a weak UK housing market – but landlords can help themselves.

According to the Council of Mortgage Lenders, buy to let lending accounted for 6% of all gross mortgage lending in the first quarter, down from 12% a year earlier. It says there were 22,400 new buy to let mortgages advanced in the first quarter of 2009, down from 72,400 in the first quarter of last year. By value, buy to let gross advances totalled £2.1bn in the first quarter, down from £9.5bn in the first quarter of last year.

One of the most worrying statistics from the CML was that 3.09% of buy to let loans were in arrears of three months or more at the end of the first quarter, up from 0.92% at the end of the first quarter last year – that's thousands of landlords facing repossession and severe financial difficulties.

Kesh Thukaram, managing director of Smartlandlord.co.uk says: "It's not a surprise to see the number of buy to let repossessions increasing. In the current environment, rental arrears are a rising problem for landlords – and increasingly they're getting landlords into arrears with lenders.

"Rental arrears not only disrupt landlords' income streams, but the costs to evict tenants from the rented property are substantial. Buy to let is not regulated and, as a result, landlords risk having properties repossessed very quickly, without the due considerations that govern owner occupied sector. In the long-term, we are going to see more of this because the most common reasons for tenants getting into arrears with rent is redundancy or some reduction in income."

"Landlords should protect their income with protection products which will combat non-payment of rent and provide legal expense cover. Landlords who are not in trouble should not be complacent. Payments for buy to let mortgages have dropped considerably thanks to the cuts in interest rate. They should overpay on their existing mortgages now to improve their credit rating for the future.

Also, Thukaram says 40% of landlords own their property outright, so any rising buy to let arrears figures do not represent instability of the whole private rented sector and should not be overblown. If you are a landlord concerned with the CML figures, talk to your mortgage adviser right away and see what you can do to make sure you do not become a arrears statistic.

SOURCE: CML, Smartlandlord.co.uk, 15/05/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog