Buy-to-let arrears fall to 8,390 as 630 properties are repossessed in Q2 2026

UK Finance recorded 8,390 buy-to-let mortgages in arrears of more than 2.5% of the outstanding balance at the end of Q2 2026. That was 570 fewer than in Q1 2026 and 25.6% lower than a year earlier. The trend is encouraging, but 630 buy-to-let mortgaged properties were taken into possession in Q2 2026, so repayment pressure has clearly not disappeared.

Lending activity also rose. There were 58,051 new buy-to-let loans advanced in Q2 2026, worth £10.7 billion. UK Finance said the average gross rental yield was 7.27% and the average interest cover ratio was 217%, down 4% on the quarter. That drop in interest cover matters because it points to thinner margins even where rents remain high.

Why the London picture can still be tight

For London landlords, the practical issue is that high headline rents do not automatically mean comfortable mortgage cover. In boroughs such as Wandsworth, Merton, Camden and Islington, purchase prices remain high relative to rent. That means landlords with a recent refinance, a short void or major works can still see cashflow tighten quickly. A property that looks fine on paper can become exposed if a fixed rate ends, a tenant leaves for six weeks, or service charges rise at the same time.

No new law here, but existing duties still apply

This update does not announce any new law or statutory deadline. The immediate issue is financial rather than legislative: landlords still need to meet mortgage repayment terms and, if payments start to slip, engage with the lender early rather than waiting for formal recovery action.

Your existing legal duties remain unchanged, including deposit protection, annual gas safety checks, five-yearly EICRs where required, EPC rules, right to rent checks, HMO licensing where applicable, and repair and housing health and safety obligations.

Start with a portfolio mortgage schedule

The first job is a portfolio health-check this week. Put every property on one sheet with:

• lender
• product type
• current rate
• monthly payment
• fixed-rate expiry date
• outstanding balance
• rent
• service charge
• ground rent
• managing agent fee
• average annual maintenance cost

If you own through a limited company SPV as well as personally, separate the two because the tax position and refinancing options may differ. If you cannot see, in one place, which loans expire in the next 6 to 12 months, you are already behind.

Stress-test each property before refinancing

Stress-test each property against a realistic London scenario. Use at least:

• one month of void per year
• a repair spike
• a refinance rate above the one you are currently paying

The UK Finance figures do not give a future rate forecast, so do not assume cuts will rescue weak deals. If a property only works at full occupancy and today’s rate, it is not a resilient asset. Landlords with smaller margins should build or ring-fence a contingency pot now, especially where service charges on London flats have risen sharply over the past year.

If your fixed rate ends by 30 June 2027, start early

If your fixed rate ends before 30 June 2027, speak to your broker or lender now. That is a process point, not a market prediction. Early conversations give you time to correct paperwork, improve rental evidence, resolve credit file issues and gather documents that underwriters often request, including:

• tenancy agreements
• EPCs
• licences for licensable HMOs
• bank statements
• proof of rent received

Rushed remortgages often cost more and are more likely to fail where the file is incomplete.

If payments are already under pressure, contact the lender early

If you are already struggling, the most important step is to contact the lender before you miss further payments. Lenders may discuss payment plans, temporary arrangements, term changes or other forbearance options, but those routes are usually easier before arrears deepen. Do not ignore letters, and do not assume a managing agent is dealing with the mortgage side. They usually are not. Keep a dated record of every call and email with the lender.

Review rents carefully and lawfully

Rent strategy also needs checking, but it must be lawful and evidence-based. Review whether each tenancy is below current market rent, whether a renewal is due, and whether the property specification justifies an increase. In London, a modest increase on an under-rented flat can materially improve interest cover, but only if handled properly under the tenancy terms and current legal requirements. This is not a licence for aggressive increases; it is a prompt to stop ignoring stale rents where market evidence supports a review.

Check insurance and compliance documents at the same time

Confirm whether your policy includes rent guarantee, legal expenses or repossession-related cover, and check the conditions carefully, as many policies require specific referencing, arrears reporting steps or document retention. Also make sure your gas safety certificate, EICR, EPC, deposit prescribed information and any licence conditions are current. Weak paperwork will not cause mortgage arrears, but it can make a difficult position more expensive if possession, insurance or refinancing issues follow.

What agents should do now

For agents managing London portfolios, the immediate task is to identify landlords with fixed-rate expiries, weak cover or recent arrears and contact them before the autumn market slows. A short client note with the Q2 figures, a remortgage timetable and a checklist of required documents will be more useful than a generic market update.

Three actions for the next 14 days

1. Within 7 days, build a mortgage schedule for every rental property and flag any fixed rate ending by 30 June 2027.
2. Within 14 days, stress-test each property for a higher rate, one void month and a repair bill, then identify which assets need reserve funding or a rent review.
3. If any payment is at risk in the next 30 days, contact the lender immediately and confirm the discussion in writing.

This article is general information, not mortgage, tax or legal advice.