Firm sounds buy-to-let repossessions warning

Moore Blatch has forecast a sharp rise in buy-to-let repossessions as re- cent interest rate rises start to affect landlords.

The repossession litigation specialist says repossessions have flattened over the past year, but warns that the market could see a significant upswing in them as both buy-to-let and owner-occupier borrowers begin to feel the pinch of four base rate increases in less than a year. Figures recently published by the Department of Constitutional Affairs show repossession claims and orders rose by 1% across England and Wales in Q1 2007 compared with the same period in 2006.

Paul Walshe, head of lender services at Moore Blatch, says: “Interest rate rises don’t hit all borrowers immediately as some of them are on fixed rate deals. Also, repossessions often occur in conjunction with other events, such as employment problems, family breakdowns or divorces.

“But we expect to see a rise in buy-to-let repossessions if the housing market weakens and landlords are unable to sell quickly.”

Linda Will, managing director of Accord Mortgages, says: “There has been a rise in arrears and repossessions but it’s important to note we’re in a period of interest rate shock.

“Some borrowers will struggle with debt and mortgage repayments as a re-sult but arrears and repossessions are still low and there’s nothing to worry about.”