In an open letter to mortgage lenders, Ben Twomey, chief executive of Generation Rent, said that repossessions of landlords by mortgage lenders had been rising and called for clarity of lenders’ policy and a meeting to understand how tenants could be protected during this uncertain era of the mortgage market.
He continued that lenders did have a right to evict tenants of homes they repossess from landlords using Section 21 or Section 8 Ground 2 of the Housing Act, but said that eviction due to someone else’s’ actions could be a “very disruptive act with often severe consequences for the tenant, that should be avoided wherever possible”.
Twomey added: “A no-fault eviction results in stress for the tenant, particularly when rents have been rising as they have been. Finding a new, affordable place to live can drag tenants away from their workplaces, families and schools.”
He noted that the upfront costs of moving for a typical private renter household was £1,700, which they often had to borrow to meet.
“Many evicted tenants end up homeless and living in temporary accommodation. Someone’s home is the foundation of their life; taking it away so easily can have devastating consequences for them and their families,” Twomey added.
Pressure on buy-to-let market
UK Finance figures estimate that there are around two million buy-to-let mortgages in the UK, with Twomey noting that interest rates had put many “under significant financial pressure”.
Bank of England estimates show that by the end of 2025, 40 per cent of those mortgages could face mortgage costs of more than 80 per cent of the rent being received.
The latest arrears figures from UK Finance also show that lenders repossessed 440 buy-to-let properties in the second quarter of 2023, and a further 2,000 landlords are more than 10% behind on their balance.
“We can only expect that more properties will be in this position, and we believe that lenders have a moral obligation to ensure that these tenants can stay in their homes,” he noted.
Twomey said that the government and lenders had agreed measures to provide forbearance to owner-occupiers but they did not help landlords. For example, one measure was to move owner-occupiers to interest-only to lower payments, but landlords often tend to be on interest-only mortgages already.
One example was that landlords often tended to be on interest-only mortgages already, with one of the measures being a temporary switch to interest-only to lower payments.
“It therefore seems likely that landlords behind on mortgage payments are at a higher risk of repossession and there is nothing their tenants can do about it.
“I would like to know what your institution [the government] is doing to prevent tenants from losing their homes if their landlord is repossessed, and if you have a policy of acting as or appointing a receiver of rent to allow tenants to stay in their homes and carry on with their lives,” he added.
