Landlords and mortgage arrears: a harsh reality

It has been reported that Landlords experiencing difficulty making their mortgage payments are being charged an average of £25–£50 for each month they are in arrears. In addition to this, many of the major mortgage lenders – like Halifax and Abbey – have the right to take a monthly ‘administration charge’, usually within the same range, in the event of arrears.

Are these charges reasonable? Or are they merely forcing landlords into the dark world of repossession? Critics seem to be leaning towards the latter statement. The landlord is clearly in some sort of financial trouble, so levying charges and administration fees is only making their situation more difficult – and ironically could contribute to making it more difficult to getting their heads back above water.

It has been claimed that a vast majority of major lenders and financial institutions will arrange to have the arrears charges stopped and a repayment schedule put into place, and all the landlord has to do is contact them to make arrangements. Regardless, several sources have confirmed that – on more than one occasion – such charges have continued, despite the new arrangement.

This issue with mortgage arrears charges has gone beyond the offices of advisers and into the County Courts. One Sussex judge, who deals with repossession cases on a regular basis, feels that the awareness is present amongst his colleagues and they are doing everything they can to keep it that way.

So what other options do landlords in trouble have?

For starters: if you have made several attempts to reach an agreement with your mortgage lender and – despite good will and perseverance – you are still unable to reach a healthy medium, it is time for you to conserve your energy and make an appointment to seek the assistance of a debt adviser. Not only are they capable of playing “let’s make a deal” with the mortgage lender, they are also well equipped to assess your financial situation and see if there are any areas in need of a trim.

Finding a good debt adviser might eliminate your mortgage arrears nightmare all together. Just remember to be informed of all your options and seek assistance when needed. Payments or no payments, it is your property and your job to keep it together! If the property is subject to a tenancy agreement, fixed or periodic, landlords need to deal with mortgage arrears as speedily as possible as the property is not simply an investment for them, it’s a home for a tenant – which they could lose.

In any event, it’s absolutely vital that if a landlord is experiencing difficulty making mortgage payments, for whatever reason, they talk to their mortgage lender, their letting agent and their tenants.