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The number of landlords falling into arrears climbed by 93% in a single year, the latest analysis by Octane Capital has revealed.

Octane Capital analysed data on mortgage arrears from UK Finance from Q4 2023 and observed how these figures changed over time. 

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

While this equated to just 0.7% of total buy-to-let (BTL) loans, it was by far both the highest number of arrears seen over the past five years, and the highest proportion of total loans. 

The Q4 total of 13,570 also marked a 93% increase in BTL arrears versus Q1 2023, having increased consistently over every quarter. 

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. 

It was a similar story for homeowners, albeit arrears did not increase at the same pace seen across the buy-to-let sector.

Total homeowner arrears jumped by 13% in 2023 when compared with 2022, having increased each quarter, with this increase also reversing the previous annual decline of 8%. 

While homeowner arrears were not increasing at the same rate seen across the BTL sector, the volume was far greater.

In 2023, 85,028 homeowners fell into mortgage arrears, over eight-times the number of landlords.

Jonathan Samuels, CEO 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.”

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