Adverse credit issues do not need to define the property market in 2025

Adverse credit issues are still set to linger in the property and lending markets. As homeowners, borrowers, investors and more struggled against our economic challenges in recent years, it became clear that many were having their goals held back.

The 2024 Specialist Lending Study from Pepper Money highlighted just how widespread these issues have become. The results showed that 8.38 million people in the UK experienced adverse credit in the prior 3 years, the highest level seen since Pepper Money launched its regular study.

Specifically, missed credit payments (11%), several missed payments resulting in defaults (7%), unsecured arrears (7%), secured arrears (5%), entering debt management plans (6%), and CCJs (4%) all sat behind the rise. Unfortunately, these issues had a direct impact on affected borrowers. Around 8% of borrowers were declined a mortgage on their first application because of their money problems.

As we reached the end of 2024, the outlook remained bleak. Separate research from The Money Charity in December found that the average total of debt per UK household sat at £65,865 in October. Moreover, the number of UK mortgages with arrears of over 2.5% of the remaining balance increased by 18.1 a day in the year to September 2024. One person was declared bankrupt or insolvent in England and Wales every 4 minutes or so in the 3 months to October, and over 450 landlords’ possession claims or orders were made every day.

The economic picture is improving as we push our way through the opening weeks of 2025. Inflation has slowed somewhat, and we’ve eked out 0.1% growth. Still, further challenges loom. The kind that could lead to people falling behind on their bills.

For instance, a recent survey from the British Chambers of Commerce (BCC) found that 55% of firms expect to raise their prices in the next three months to keep up with hiked tax costs. At the same time, millions are likely to be hit by hiked council tax bills over the coming months.

Seeing all this could make high street lenders and borrowers nervous. But while these kinds of issues persist, it doesn’t mean property investors and landlords are devoid of options. The specialist finance market is there for those who are struggling with missed payments, CCJs, and even bankruptcies to their name.  

Fortunately, it appears more industry insiders are recognising this. Brokers, specifically, are turning to the bespoke lending market for salvation.

Nearly two-thirds of brokers who took part in research for United Trust Bank said they had written more specialist mortgage cases in 2024 as a proportion of their business than they did in the previous year. Also, 81% of brokers said they are seeing more customers with financial blips/adverse credit issues, and 81% also believe that helping customers with adverse credit is the biggest area of opportunity for brokers in the specialist sector.

We’ve been aware of this for several years now at Market Financial Solutions. We know that a temporary financial slip, likely caused by issues outside of a borrower’s control, does not define their investment acumen.

It’s why, across all our products, we will give a fair hearing to all enquirers, and try to find a way forward for their circumstances. We are forward looking, and focus on the potential of the investment plan, a property’s value, and the strength of the exit strategy. Missed payments and the like do not render us immobile.

The market will be in need of understanding, and flexibility in 2025. We’re here to provide just that.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.