House repossessions on their way down! Good or bad news for buyers?

publication date: Feb 19, 2015
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

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House repossessions on their way down! Good or bad news for buyers?

According to the Council of Mortgage Lenders in 2014 the number of people who had to hand their home back to the mortgage lender fell dramatically – by an enormous 26%.

Read - First time Buyer Quick Guide

In 2013, nearly 30,000 homes were repossessed and it’s great news that in 2014, nearly 10,000 more people managed to stay in their homes as the number of repossessions fell to just 21,000. This is even less than the booming property price years which took on average 25,000 people’s properties back into mortgage lender’s possession.

In fact, with the repossession rate now at just 0.19% of all mortgages, this rate is the lowest seen since 2006.

Interestingly, most were home owners, with just over 16,000 losing their property, but there were nearly 5,000 buy to let landlords repossessed too – which in turn is likely to mean as many tenants lost their home as well as lenders tend to sell rather than continue to rent the properties they take back.

Interestingly, the number of repossessed properties under buy-to-let mortgages was slightly higher than home owners, suggesting that buy to let doesn’t always make the huge returns that people are claiming.

Read - First time Buyer Quick Guide

In fact, since 2008 alone, tens of thousands of would-be buy to let investors have had their properties repossessed.

And it was good news for those in who are behind on their mortgage payments too – around 117,000 homes were not up to date with mortgage payments and this in itself is down from nearly 145,000 in 2013, so clearly the housing market and people’s ability to be able to pay for their homes on-going has dramatically improved over the last 12 months.

CML director general Paul Smee commented: "No-one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing. It's essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise."

Read - First time Buyer Quick Guide

What does this mean for buyers and investors? 
One the hand it’s great news – it means the market is, in general, on the up and people are not having to hand back the keys to their homes.


However, for buyers and especially investors it’s not great news. Desperate sellers mean the ability to buy properties at a bargain price prior to repossession. Many property investment companies will tell you to ‘stalk’ people in financial difficulties to benefit from their misery – it isn’t a nice thing to do and there are much better ways of creating ‘win win’ deals from this.

Talking to Jason Harris from Open Property Group, a professional buying company, he explains “people who are facing repossession are in a vulnerable state and it’s important not to take advantage of them, but offer a fair price for the property. This in turn means you are more likely to secure the property purchase and referrals from other people for future business.”

For anyone thinking of securing a quick cash sale, Jason’s advice is:-

  1. Only use buyers who have their own funds, readily available in a bank account.

  2. Sell to a company rather than an individual, some people just sell on your ‘lead’ to others

  3. Make sure you visit the government’s Money Advice Service  for independent help choosing a company to work with.

If you do need help finding a quality company who looks after your purchase professionally and works to a timescale that suits you, contact Jason and his team on 0800 990 3939 or +44 (0)208 787 5860 or read more about them on their website.

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Which? Property books and one of the UK's top property experts.
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