Overview of Landlord Repossessions
The UK’s private rented sector has faced significant challenges in recent years, with economic pressures driving many Landlords to the brink of financial crisis. A combination of rising interest rates, inflationary pressures, changes in tax regimes, and legislative requirements have lead to an increase in Landlords being repossessed by mortgage lenders.
For Landlords operating on minimal profit margins, additional costs have become unsustainable. Even those with fixed-rate mortgages are not immune, as they faced higher rates when deals come to an end. The inability to refinance at affordable rates has left some Landlords with no choice but to sell their properties or face repossession.
For some, the cost of compliance has outweighed the potential returns, leading to decisions to exit the market altogether or default on mortgages due to financial strain.
The numbers of landlord repossession actions for all court stages have increased compared to the same quarter of last year (July to September 2023).
Claims (25,418), orders for possession (19,254), warrants (11,763) and repossessions (6,942) have increased by 2%, 7%, 17% and 13% respectively compared to the same quarter in 2023.
Landlord possession actions have shown a general increase since Q2 2021. Within the landlord possession actions, claims have increased across all procedures with accelerated claims down 2%, private landlord claims up 5% and social landlord claims up 3% compared to the same quarter in 2023.
In Q3 2024, 36% or 9,069 of all landlord possession claims were social landlordclaims compared to private landlord claims (31% or 7,786). 34% (8,563) were accelerated claims. This contrasts with pre-Covid proportions when a majority of claims (around 60%) were social landlord claims.
The rise in claim and orders volumes is observed across most geographical regions. As in previous quarters, a concentration was seen in London, with 8,818 landlord claims and 6,674 landlord orders at London courts in Q3 2024, accounting for 35% each of the respective totals. In London, there was an increase of 10% (from 8,009 in Q3 2023) for landlord claims and an increase of 20% for landlord orders (from 5,541 in Q3 2023).
The 17% increase in landlord warrants compared to Q3 2023, was driven by an increase in London. Meanwhile, the North East, North West, and Wales all saw decreases in the number of warrants over this period, while the East Midlands and Yorkshire and The Humber remained unchanged. The largest regional number (4,545) was again found in London, making up 39% of all landlord warrants. There was an increase of 61% for landlord warrants in London (from 2,826 in Q3 2023 to 4,545 in Q3 2024).
Since Q4 2022, the methodology used for calculating the rates of possession claims and repossessions had been modified to take into account the variation in proportions of tenure types in each local authority (LA) as measured by the 2021 census. The previous methodology (in place prior to Q4 2022) used total household figures as the denominator for all claims and repossessions rates. Since Q4 2022, this has now been modified to use household volumes by tenure; mortgage, social and private landlord volumes for each local authority. For example, the rate of mortgage claims is now calculated as the number of mortgage claims divided by the number of households owned by a mortgage or loan in each LA. Similarly, rates for private and social landlord claims and repossessions have now been calculated separately as a rate of households in each LA owned by a private or social landlord respectively.
Only time will tell if the number of landlords being repossessed increases once the Renters’ Rights Act comes into force.
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