Property Sector Faces a Repossession ‘Ticking Time Bomb’
Latest states show deepening repossession crisis
The Ministry of Justice’s latest set of statistics paint a picture of the deepening cost-of-living crisis, and there are dark skies on the horizon for the property sector.
The figures, which cover July to September 2022, show that all types of court actions increased significantly for both homeowners and tenants.
And there’s worse to come for the property sector
As they cover July to the end of September, the figures do not account for the huge jump in interest rates following Liz Truss’s devastating mini-budget.
Commentators have described the soaring interest rates as creating a ‘ticking time bomb’ that could devastate thousands of households. There have been calls for the government to provide safety nets and further support, particularly as interest rates are set to rise further in the coming months.
The next set of statistics, due to be published around February 2023 will reveal how the situation is unfolding.
Here are the report’s key 3 messages for landlords:
1. Eviction processes are speeding up as courts continue covid recovery
The legal system is definitely getting back on its feet after the disruption of the pandemic. This will come as a relief to the thousands of landlords waiting to get a possession order and regain access to their property.
The average timeline for landlord repossession (i.e. from claim to possession) was 22.3 weeks. In the same period in 2021, the average was a demoralising 68.6 weeks, which saw many a landlord tearing their hair out as they waited to get control of their properties again.
The figures show “continued recovery in all court actions when compared to the same period last year,” according to the accompanying analysis.
2. Landlord repossessions: Landlord claims are at the highest level ever.
The numbers show that the volume of court actions by private landlords has surpassed pre-pandemic Covid levels. As well as landlord possession claims hitting an all-time high, all landlord possession actions have increased significantly.
Compared to the same period last year:
- Landlord possession claims more than doubled (10,202 to 21,012),
- Landlord possession orders nearly trebled (5,601 to 15,352)
- Landlord possession warrants nearly doubled (4,552 to 8,505)
- Repossessions also increased, though by a relatively modest 10% (4,891 to 5,403).
This increase has been seen across all geographical regions, with a concentration in London, with 28% of landlord claims and 24% of landlord orders being at London courts. London experienced an increase of 118% in landlord claims and a 137% increase in landlord orders to boot.
1 in 3 court claims in this period was from the private rented sector. Back in 2019, it was less than 1 in 4.
3. Mortgage repossessions are on the rise – and there’s more to come
But it’s not just landlords flocking to the courts – lenders are too. Mortgage-related court activity has increased significantly since the same period in 2021.
Compared to the same period last year:
- There was a 30% increase in mortgage possession claims (2,832 to 3,680).
- There was a 157% increase in warrants (947 to 2,437).
- There was a 103% increase in possession warrants (1,229 to 2,491).
- There was a 91% increase in repossessions by county court bailiffs (390 to 744).
- The highest rate of mortgage possessions claims was in the South East.
Medway in Kent had the highest rate of mortgage possession claims, at 34 per 100,000 households. Greenwich, in London, had 33 per 100,000, while Slough had 32 per 100,000.
And the time it takes for a repossession to go through has almost halved as the courts continue to recover from the impacts of covid. The median time from claim to repossession has decreased to 60.1 weeks, down from 114.7 weeks in the same period in 2021.
Are you worried about repossession or rent arrears?
Here are a few things you can do which might give you better security or peace of mind.
- Speak to your lender. Don’t bury your head in the sand if you’re having trouble paying your mortgage. The earlier you’re honest with your lender, the more they can do to support you.
- Is this a job for dispute resolution? Some issues between tenant and landlord require a court order, but for some there could be a simpler – and cheaper way. Whether you use a mediator or simply reach out to your tenant yourself, dispute resolution can fix misunderstandings and save you from court fees and void periods. It’s worth considering.
- Repayment reliability. Lenders won’t be looking to repossess a property if the mortgage is always paid on time, but if you’re having trouble receiving rent, there’s a snag in the system. That’s why it’s worth considering Rent Guarantee Insurance, or a Rent Collection Plan.
- Get support from your community. There’s nothing like a chat with those who’ve been in the same position as you. So be sure to join the private Mashroom Landlord Community on Facebook, where you can find hundreds of landlords, as well as Mashroom’s knowledgeable team members.
And remember, Mashroom is built by landlords, for landlords, so head to our Help Centre for any landlord questions or conundrums.For more detail on the statistics from repossessions and evictions, see the Ministry of Justice’s full report.