Tenants warned about repossessions

People who rent a flat in London have been warned that they could fall victim to a "glut of repossessions".

Paul Holmes of Firstrung, which specialises in delivering solutions to first-time buyers, argued that a rental void has been created by rising mortgage rates.

He predicted that the fallout from the credit crunch could become so severe that many buy-to-let investors will end up being unable to meet their mortgage repayments and move to evict tenants.

"Buy-to-let is a business transaction - it is very unemotional," Mr Holmes asserted.

"If a landlord suddenly sees his property falling in value, he's got rental voids, his mortgage has gone up and he can't increase his rent to match his mortgage, he's going to make a cold calculated business decision and hopefully throw his keys back to the lender."

Analysts have interpreted the comments as being an indication of the high degree of tension within the market and have reminded tenants of the importance of using reputable London estate agents.

News posted on 12th May, 2008