As the mortgage and housing markets brace themselves for impending recession, it seems it is the buy to let mortgage market that has, so far, been hit the hardest by the credit crunch.
New statistics from the Council of Mortgage Lenders (CML) have revealed that there were only 144,600 new buy to let loans issued in the first half of 2008, down from 176,500 in the second half of 2007.
In fact, repossessions and missed payments in the buy to let mortgage
sector are, according to the housing and homelessness charity Shelter, increasing twice as fast as all mortgages, thus putting tenants at just as much risk of repossession as mortgage holders.
And, according to Shelter, the number of repossessions in the buy to let market increased by100 per cent between the first half of 2007 and the first half of 2008, compared to 48 per cent across the rest of the mortgage
Speaking of the increase in repossessions, Adam Sampson, chief executive of Shelter, said: "These figures show the shadow of repossession is no longer just cast over homeowners, but also thousands of innocent renters who have no idea how close they are to eviction.
"Sadly, the impact of repossession can be even greater for tenants, who, despite paying rent on time, can find themselves with very few rights and the first they even know about it is when the bailiffs start banging on the door."
Action is required, said Mr Sampson, proposing that, mortgage lenders
take responsibility and ensure they inform both owners and tenants when taking action to repossess, so that tenants are aware they are about to get turned out.
Despite the news, the CML found that repossessions in the buy to let mortgage market were steady overall. Director general of the CML, Michael Coogan, comments: "The shortage of mortgage funding is creating similar problems for buy to let landlords as it did for other borrowers. However, we expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now."
© Fair Investment