Buy-to-let mortgage arrears making tenants homeless but market is picking up

30 March 2009 / by Rachael Stiles
A group of charities and organisations are calling on the Government to improve the legal rights of tenants who find themselves homeless when their buy-to-let landlord falls into mortgage arrears and their home is repossessed.

Citizens Advice, Shelter, Crisis, and the Chartered Institute of Housing (CIH), are receiving increasing numbers of people asking for help after they have been made homeless.

The group have received pleas for help from tenants who have returned home to find that the mortgage lender has repossessed the property, the locks have been changed, and their possessions are out on the street.

The group predicts that thousands of tenants are at risk from being made homeless in this way, and are urging the Government to change the law so that they are given sufficient time in which to find suitable alternative accommodation.

Currently, the law states that they must be give just two weeks' notice, with none of the legal rights that usually protect tenants against losing their homes without notice.

"At a time when many people are focused on homeowners, we risk forgetting that tenants of private landlords are extremely vulnerable to the recession. It is outrageous that the first time some people discover they are going to lose their home is when the bailiffs ring the doorbell," said Leslie Morphy, chief executive of Crisis, the national charity for single homeless people.

"Tenants need legal protection to ensure that they at least have reasonable time to find somewhere else to live. The alternative too often can be homelessness."

While repossession is often through no fault of the tenant, the National Landlords' Association (NLA), the representative body for private-residential landlords in the UK, has found that one in three landlords currently have tenants in rent arrears, which, combined with the current shortage of credit, may be contributing to the number of landlords whose properties are repossessed.

In the last six months, 44 per cent of landlords have experienced rental arrears, which, the NLA said, "goes some way to explaining the significant rise in repossessions and why a growing number of landlords are having problems meeting their mortgage repayments."

Despite the number of landlords falling into arrears, the buy-to-let market has seen an increase in business during the last three months, according to the Association of Residential Letting Agents, which has found that in this period more landlords bought properties than sold them, something which has not been seen for two years.

Ian Potter, operations manager of ARLA, said: "The data shows that there are bargains to be had in the property market at the moment for those with a keen eye. This is substantiates our belief that buy-to-let remains a viable long-term investment vehicle."

He added: "The signs are showing that it’s a buyer’s market at the moment, providing of course you can get the finance. But clearly the interest is there and lenders need to sit up and take notice."

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