Octane Capital analysed arrears data from the Building Societies Association and found that buy-to-let arrears which made up more than 2.5 per cent of the loan amount had increased by 42.6 per cent since 2019.
This jumped from 4,930 in Q1 2019 to 7,030 in Q1 2023.
Over the same period, corresponding arrears among homeowners fell by 8.6 per cent from 83,870 to 76,630.
Higher share of homeowners falling behind
Octane Capital said although buy-to-let borrowers were falling into arrears at a faster rate than homeowners, there were still a greater proportion of homeowners behind on payments.
In Q1 2023, the number of homeowners in arrears accounted for 0.87 per cent of all outstanding loans.
This has remained around the same level for some years and peaked at 0.94 per cent in Q1 2021.
Meanwhile, the share of landlords in arrears represent 0.34 per cent of outstanding loans.
While this is a lower proportion when compared to homeowners, Octane said this was the highest total number since Q1 2019 and the largest share of all loans since Q4 2022.
Jonathan Samuels, CEO of Octane Capital, said: “It’s certainly a worrisome time for the property market, with mortgage rates and high inflation stretching people’s affordability to the limit.
“It’s striking that buy-to-let landlords are becoming less shielded over time from the economic conditions, suggesting they are unable to entirely recoup their lost income in the form of higher rents.”
He added: “The research suggests levels of arrears are in no way out of control however, so there’s no need to be too doom and gloom about the state of the housing market.
“The Chancellor’s mortgage forbearance measures are designed to reassure people who are worried about the impact of rising rates, and it’s welcome these measures have been introduced before the horse has bolted – cases of arrears need to be tackled before people fall into trouble.”