Lenders’ trade body UK Finance says there were 11,540 buy to let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2023.

This is a disturbing 29 per cent rise on the previous quarter.

Within the total, there were 6,270 buy to let mortgages in the lightest arrears band (representing between 2.5 and five per cent of the outstanding balance). This was 33 per cent greater than in the previous quarter.

Mortgage brokers – speaking to UK news agency Newspage – have expressed severe concern. One says: “I predict a horrible ending” and another: “What was once a dream has turned into a nightmare for many”.

Craig Fish of Lodestone Mortgages and Protection, says: “When it comes to remortgaging, many landlords are finding that they are unable to do so, due to insufficient rental income and are having to stick with their current lender on higher-priced products. 

“This results in landlords increasing the rent they charge, which in turn has a knock-on effect on the tenants who are unable to pay, resulting in rental voids. 

“Historically, before the tax changes, landlords would have had surplus funds with which to weather this storm.”

Ranald Mitchell of Charwin Private Clients adds: “Worryingly, we have not seen the worst of this. There is so much pressure on landlords as arrears increase and tenants struggle to make rent payments. 

“Many of those affected will not be portfolio landlords, just normal people who aspire to build wealth through property. They rely on rent to cover the mortgage payments and will not have the personal resources to cope. 

“Falling into arrears like this has a huge impact on their ability to refinance or mortgage for years in the future, and will have far-reaching consequences for their credit profiles. What was once a dream has turned into a nightmare for many.”