Landlords are feeling the pinch of successive rate hikes, the latest research by specialist property lending experts Octane Capital reveals.

The data shows that cases of arrears in the buy-to-let sector are worsening at a far faster rate than for homeowners.

Cases of BTL arrears of more than 2.5% of the loan amount have risen by 42.6% in four years, from 4,930 in Q1 2019 to 7,030 in Q1 2023.

Over the same period, cases of arrears for homeowners of more than 2.5% have declined by 8.6% – from 83,870 in the first quarter of 2019 to 76,630 in the first quarter of this year.

Octane Capital analysed industry figures on the number of mortgages that have fallen into arrears by 2.5% or more of the mortgage balance.

The company then compared the split between the BTL and residential sectors and how each compared to the pre-pandemic market. 

The findings suggest that fewer landlords are being shielded from the current economic climate, with both mortgage rates and energy prices increasing at a faster rate than rents.

They also reveal that it’s still more common for residential homeowners to struggle, however.

In the first quarter of this year there were 76,630 homeowners in arrears of 2.5% or more of their mortgage balance, accounting for 0.87% of total homeowner loans outstanding.

This proportion has hovered around this mark for the past four years.

In contrast, the number of landlords in arrears of 2.5% or more of their mortgage balance totalled 7,030 during Q1 of this year and accounted for 0.34% of total outstanding buy-to-let loans. 

Octane Capital chief executive officer Jonathan Samuels says: “It’s striking that buy-to-let landlords are becoming less shielded over time from the economic conditions, suggesting they are unable to entirely recoup their lost income in the form of higher rents.