In the last three months, county court judges have ruled on more than 7000 repossession hearings in the UK. The Royal Institution of Chartered Surveyors has forecasted that 19,000 properties are expected to be repossessed by the end of this year. The group of owners most like to default on their home loans are first-time buyers. It is an alarming statistic – almost three times higher than the 2004 figure, but still way under the staggering 1991 figure of 75,500.
There are many reasons that lead to home owners defaulting on their mortgages. A two-income family loses one of its wage earners to unemployment, and suddenly there are insufficient funds to keep up with payments. While Illness and divorce can have devastating effects as well, in most cases, home owners who have purchased in recent years have simply under-budgeted or failed to plan for the unexpected.
The Council of Mortgage Lenders has warned that property prices will rise by 1% in 2008 and that this will result in “a huge rise in the number of homes repossessed”. Up to 170,000 homeowners may struggle to meet their mortgage payments. With an expected rise in income rates, repossessions for 2008 are forecast at 45,000.. Those whose fixed-rate mortgage periods are coming to an end will feel it first.
While these statistics are certainly depressing, there is a new group of investors in the market today who are willing to take over the burden from those facing repossession. These investors buy houses from people who appear to have no options left. Many have already been given a date for repossession. If there is equity in the property, these companies will step in and take care of everything, often covering all costs, including valuation and legal fees and often arranging for their clients to sell and rent back their homes, or even sell and buy back their homes once their financial situation improves. In some cases a period of no rental payments is built into the contract. They normally do not charge for their services and some have a real desire to help others.
The next 12 months may look bleak, but those who are facing repossession do have options available to them, thanks to the new wave of property investors who have found a way to help people in need as they invest in new properties.
Evgeni Vachkov of St Genix Property Investors says: “There are still companies that are set out to assist home owners who are facing repossession in the best way they can. Ethical property investors create real win/win solutions by understanding the homeowner’s situation, while lenders and estate agents continue to force vendors in extensive debt.
