Buy-to-let mortgage arrears have fallen significantly in the first quarter of 2026, according to the latest data from UK Finance. The number of buy-to-let mortgages in arrears dropped by 24% compared to the same period last year, signalling an improving financial position for many landlords.

Decline in Buy-to-Let Mortgage Arrears

UK Finance reports that 8,960 buy-to-let mortgages were in arrears during the first quarter of 2026. This figure represents a 6% decrease from the previous quarter and a substantial 24% reduction year-on-year. Arrears now account for just 0.47% of all buy-to-let mortgages, indicating a relatively low level of financial distress within this sector.

Despite this positive trend in arrears, the number of buy-to-let properties taken into possession increased slightly. A total of 810 mortgaged buy-to-let properties were repossessed during the quarter, marking a 5% rise compared to the final quarter of 2025, although this figure remains unchanged when compared to the same quarter last year.

James Tatch, head of analytics at UK Finance, commented: “The number of mortgages in arrears continues to fall for both residential and buy to let mortgages. While possessions are up very slightly on the previous quarter, they remain low by historic standards.”

Homeowner Mortgage Arrears and Possessions

Among homeowners, 79,110 mortgages were in arrears of at least 2.5% of the outstanding balance in Q1 2026, a 2% decrease from the previous quarter. The homeowner arrears rate currently stands at 0.91%, nearly double the rate seen in the buy-to-let sector.

Possessions among homeowners also rose slightly, with 1,250 mortgaged properties taken into possession during the quarter. This is an increase of 38 properties, or 3%, compared to the previous quarter.

UK Finance highlights that the current levels of arrears and possessions are significantly lower than during the last major spike in mortgage arrears, which occurred in the second quarter of 2009 amid the global financial crisis. At that time, the combined number of homeowner and buy-to-let mortgages in arrears reached 216,400.

Notably, more than two-thirds of possessions currently relate to mortgages arranged at least ten years ago, suggesting that older lending arrangements continue to impact possession rates.

Property Sector Reaction

Mary-Lou Press, President of NAEA Propertymark, welcomed the reduction in mortgage arrears but urged caution. She said: “While it is positive news to hear mortgage arrears sit lower during the first quarter of this year than they did within the quarter directly previous, it is, however, important to acknowledge future affordability constraints, especially concerning current global unrest.”

She added: “The current rate of inflation remains a key concern, and the impact this may have on the base rate remains to fully play out yet.” This highlights ongoing economic uncertainties that could affect landlords and homeowners alike in the coming months.

What this means for landlords

The continued decline in buy-to-let mortgage arrears is encouraging for landlords, suggesting that many are managing their mortgage commitments effectively despite economic pressures. However, the slight increase in possessions indicates that some landlords may still face challenges, particularly those with older mortgage agreements.

Landlords should remain vigilant about affordability issues, especially given inflationary pressures and potential base rate changes. Staying informed and seeking professional advice on mortgage and financial planning will be essential to navigate any future volatility in the property market.

Source: Based on reporting from Property118

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