Autioneers report rise in buy-to-let repossessions

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by Gill Montia

Allsop, the UK’s largest property auctioneer, has reported a rise in repossessed properties in its February sales, a significant number of which have come from buy-to-let investors.

It is widely recognised that the most vulnerable buy-to-let investors are those who own new-build properties in city centres.

Only last month, Neil Woodford, a well respected fund manager at Invesco Perpetual, warned that such properties now “almost unsellable”.

Cities such as Leeds, Newcastle and Liverpool have an oversupply of new-build flats, most of which have been bought by buy-to-let investors. Many of these landlords are now struggling to find tenants.

In addition, Mortgages Plc, West Bromwich Building Society and Preferred Mortgages will no longer lend above 75% of the property value on this type of development.

According to David Whittaker of Mortgages for Business, the specialist buy-to-let lender: “There are one or two city centres where people were led by the nose into rent-guaranteed deals, and once the guarantees ran out they found themselves without tenants and in trouble.”

However, for investors who have not overstretched themselves or bought the wrong kind of property, the outlook remains positive.

Paragon Mortgages recorded a 19% rise in rents in 2007 and the average yield is now 6.2%, up from 6% in February 2007.