The number of mortgage and landlord repossessions for the quarter July to September 2022 have been published by the Ministry of Justice.
Despite the fact that the figures do not yet reflect the massive turmoil created by the former chancellor’s ‘mini-budget’, there were significant increases in both mortgage repossessions and landlord repossessions.
Mortgage repossession claims rose by nearly a third compared to the same quarter in 2021, with 3,680 claims recorded.
Landlord repossessions rose 10% compared to the same period last year from 4,891 to 5,403, while landlord possession claims more than doubled to 21,012 from 10,202 between July and September 2022.
Possession claims increased in all regions although landlord claims were concentrated in London, which recorded nine of the ten highest claim rates.
At the same time, the median average time taken for a claim to mortgage repossession has reduced to 60.1 weeks – down from 114.7 weeks over the same period in 2021. Landlord repossession times have also decreased – down from 68.6 weeks to just 22.3 weeks.
UK Finance says that almost 74,500 homeowner mortgages were in arrears of at least 2.5% of the outstanding balance, 1% down from the previous quarter. This includes 28,910 homeowner mortgages with arrears of 10% or more.
Buy to let mortgage arrears, however, showed an increase of 2% on the previous quarter, up to 5,760 including 1,780 buy to let mortgages with arrears of 10% or more.
Homelessness charity, Crisis, has predicted a continued rise in tenancy evictions once court backlogs are cleared and the cost of living crisis bites deeper. Chief executive, Matt Downie, described it as a time of “huge uncertainty” for tenants and called for a “safety net” to protect people at risk of having their tenancies ended at short notice.
Savills has already predicted a fall in UK house prices over the next year of around 10% with the expectation that a recovery may start in 2024. In the meantime, there was the possibility that some home owners could go into negative equity.
Rental prices are also likely to increase as a result of fewer first time buyers being able to afford to buy property and a reduction in buy to let investors in the market. Indeed, the buy to let sector is likely to be particularly affected by rising mortgage rates.
Prior to the coronavirus pandemic, there was a historic fall in the number of mortgage possessions since the financial crisis of 2008. This reflected several factors, not least lower interest rates but also the approach of lenders towards managing consumer debt as well as other interventions and also the number of owner occupiers.
The report shows that private landlord possession claims are at a level in excess of pre-pandemic levels and at their highest ever recorded level. At the same time, social landlord claims are “significantly” below pre-Covid levels, albeit at their highest level since March 2020.
A mortgage protection fund has been mooted by some MPs, possibly with a grant of up to £300 a month for those who have experienced a 10% increase in their mortgage repayments. Lib Dem spokesperson, Sarah Olney, described the figures as the “tip of the iceberg” and the effects of the mini-budget as a “ticking time bomb”. However, the government aims to help tenants at risk of “no fault” eviction by abolishing Section 21.