Profit from the buy-to-let chaos

Wealthy investors are seeking to profit from the pain in the buy-to-let market as figures reveal arrears among landlords have jumped sharply in the last 3 months. The council of mortgage lenders said last month that 1.58% of buy-to-let loans (18,000 cases) were in arrears at the end of September, up from 1.1% or 12,000 cases at the end of June.

The propertion of landlord mortgages in arrears was higher than the 1.44% of all mortgages behind with payments, at 168,000 in total. According to Ministry of Justice data, courts made 16,851 orders to repossess property from landlords in the three months to September. "The payment profile of buy-to-let lending has worsened more rapidly than the market as a whole. Reasons including falling rents and an over supply of rental property in some areas," it said. Investors are seeking to profit from distressed landlords by picking up properties at rock-bottom prices.

At the November auction conducted by Allsop, the auction house, 80% of stock comprised reposessions from landlords and lenders, with 91 of lots sold raising £90m. EIG, the auction information service, is routinely recording discounts of 50% on new build properties, and 25% on non new build.