Buy to let landlords are losing their properties at over three times the rate of homeowners who live at the property, research has shown.

According to figures from the Council of Mortgage Lenders, 1,700 buy-to let properties were repossessed by lenders in the first quarter of this year. However, when a receiver of rent is included, this figure jumps to 4,100.

A receiver of rent is employed by a lender to collect rent when a landlord defaults on his mortgage payments. This process allows the tenant to remain in their property instead of losing their home, and gives the lender time to decide what to do with the property. The mortgage interest can be offset by the rent.

In the first three months of this year 2,400 receivers of rent were appointed by lenders - eight times the number in the first quarter of 2008. This year 0.35% of buy-to-let properties were repossessed by lenders, compared with 0.11% of owner-occupied properties.

One reason for this is that many landlords bought expensive properties, but tenants were not prepared to pay rents high enough to cover the mortgage.

Lenders have become significantly tougher over buy-to-let mortgages. During the housing boom in September 2007 there were 3,662 different buy-to-let mortgages, yet last month this had dropped to just 218.

Lenders also require homeowners to raise a larger deposit before they can take out a mortgage. Whereas it was easy to obtain a buy-to-let mortgage with a deposit of 15% at the beginning of 2008, most lenders now require at customers to pay at least 25% of the property’s worth up-front.

This entry was posted on Thursday, June 11th, 2009 at 9:23 am and is filed under Housing Market, Investing, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.