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We need to tackle the rise of landlords with CCJs and impaired credit – Castle Trust

by: Matthew Wyles, executive director of Castle Trust Capital
  • 03/11/2017
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We need to tackle the rise of landlords with CCJs and impaired credit – Castle Trust
The landlord population of the UK is larger than the entire population of Estonia, with 1.75 million adults owning rental property, according to HMRC data.

It’s a significant and diverse group of people and, as such, it’s not immune from financial adversity.

The Money Charity, which aims to improve financial capability, claims that every day in the UK 248 people are declared insolvent or bankrupt, 1,230 are made redundant from their jobs, and 3,321 are issued with a County Court Judgment (CCJ).

In fact, during the first quarter of this year there were 298,901 recorded CCJs, which was a 35% increase on the same period in 2016 and the highest figure in a single quarter for more than a decade, according to Registry Trust.

Given the large population of landlords and the prevalence of credit events like these, it is reasonable therefore to assume a crossover, with a number of property investors also suffering from a tarnished credit record.


Few options

Suffer is the correct word here because, unlike the owner-occupier sector which has long catered for credit issues, most buy-to-let landlords with an adverse credit history are desperately short of options.

Those products that have traditionally been available, have either expressed a tepid appetite for impaired credit or imposed significant lock-in periods.

Of course, buy-to-let landlords are, on the whole, more affluent than those without investment property.

The profile of UK private landlords which was published by the Council of Mortgage Lenders earlier this year (before it was absorbed into UK Finance) found that the median gross income band, including rental receipts, for landlords was between £60,000 and £69,999. This is clearly significantly more than the UK median household income, which was less than £26,000 at the end of 2015 – but it is not astronomic.


Little wriggle room

In fact, while most buy-to-let talk of late has focused on portfolio landlords, the vast majority of landlords (more than 60%) own just one rental property.

So, when common triggers like divorce, illness or redundancy do happen to buy-to-let investors, they might have a little wriggle room, but possibly not enough to avoid a significant credit event.

And so, with an increasing tax burden taking hold in the coming years, we believe that finding solutions for landlords with adverse credit is going to be a growing area of demand for intermediaries.

In fact, it is likely that there is already a pent-up but dormant demand from landlords who have written off their own chances to access new mortgage finance.

So, the availability of new solutions in this area is a great opportunity to revisit your client base and educate them about their options.

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