The company, which has just published its latest (March 2010) data, reported a 53 per cent leap in distressed buy to let investors struggling to pay their creditors. Typical debts ranged from £163,000 to £201,000 – in all reported cases those saddled with the property debt were middle class professionals owing substantial mortgage arrears.
IVA.com director, Terry Balfour, said:
“We have seen a near melt down in the buy to let market, with a combination of rental arrears caused mainly by tenants losing their jobs, void periods and high fixed rate mortgages causing serious problems."
Recent figures from the Council of Mortgage Lenders show that arrears are down 37 per cent year on year, with the number of repossessed in the final quarter of 2009 also down by 25 per cent, as many landlords started to benefit from reduced interest rates.
Balfour added:
"While it is encouraging to see that the total number of buy-to-let repossessions remain a relatively small percentage of the market, our experience is that when landlords do get into trouble, the debt levels become very unmanageable.
IVA.com is also experiencing higher traffic from financial services professionals, including legal and banking sector workers.
“Our biggest debt cases are currently solicitors, again, in the buy to let market, which just goes to show that even the professionals can get it seriously wrong. The profile of those with serious debt “varies considerably
“They range from ordinary blue collar workers, who probably make up the bulk of our case histories, to civil servants, police officers, firemen and members of the armed forces.
“The average level of debt is £50,000, although from time to time we get people with relatively low debt levels who are in trouble. Some come to us with just £15,000 of debt, but if they have no means of repaying, then an IVA may be an appropriate solution.
Another concern for IVA.com is the number of people being channelled into the wrong kind of debt solution.
“We have been hearing from a growing number of consumers looking for a second opinion on the best option for them to deal with their debt. What really worries me is that more and more of these people have been told that they should sign up for an IVA when it quite clearly is not the solution they need.
“Debt solutions need to be finely tuned to the individual’s circumstances and whilst an IVA can be the best strategy for some, it can be a disastrous choice for others and only lead to failure.”
