In yesterday’s post I mentioned some of the victims of the housing market downturn; tenants in buy-to-let properties. Many have found themselves homeless because their landlord has not kept up with mortgage repayments and had their property repossessed. If the cause were the tenant not paying their rent well fair enough perhaps, but all too often it’s no fault of the tenant at all. Most mortgage agreements contain clauses that require the landlord to seek the lenders permission to grant a tenancy. Many landlords don’t realise it’s there and others just ignore it. After all what lender is going to kick up a fuss? Very few probably so long as mortgage payments are kept up.
But here’s the rub. If the landlord doesn’t keep up with payments and gets repossessed, (and there are plenty of buy-to-let investors who geared themselves up too high and find themselves in difficulty), the tenancy is deemed null and void and the tenants kicked out by the lender.
Good news on this today. The government has announced that it is consulting on new rights for tenants to avoid the worst of this. Within their press release a dreadful story showing why action on this needed “A lone parent with two children who had been renting a property for 10 months. She came back from a holiday to find the locks had been changed and there was a notice announcing that a possession order had been made.”
Showing posts with label reposessions. Show all posts
Showing posts with label reposessions. Show all posts
Wednesday, August 05, 2009
Tuesday, August 04, 2009
Unaffordability - the saviour of our housing market
Last week I reported on the truly staggering empty homes problem in the United States. The popular repost is - it could never happen here. Well possibly, but probably not for the reasons you might think
When the property market started falling last year there was much talk of what the graph would look like. Would it be a quick down and up “V”, a slower “U”, a down up down and up “W”, a down and stay down “L”, or my particular favourite analogy a down, stay down, then up “skip shape”.
A year in, with talk of property prices and stock markets rising, and banks back in the black, it is now apparent that the “U”, “L” and “skip” property markets are not on the cards. We may have a quick “V” downturn after all. To many people three months of house price rises have come as something of a surprise. The flood of repossessions was less extensive than feared, and with fewer properties on the market, those that are available have scarcity value. Phew, that wasn’t so bad was it, lets crack open the bubbly.
Well hold on there is still the possibility that this may be the middle up slope of the “W”. Or indeed a shape we haven’t even thought of yet. As I reported here last week the property market in the United States, which started falling six months before ours, has taken a real battering. And although there is no guarantee that ours won’t follow; one little discussed factor may have saved our housing market from meltdown. Ironically it is one that is usually spoken of as its greatest weakness – unaffordability. This problem has resulted in younger people being priced out of owner occupation. Indeed in 2007 the average age of a first time buyer had reached 34, up seven years since 1977. Now as it so happens, it is that same age group that have been hit hardest by the recession. Increases in unemployment have been greatest amongst the young . The older (mortgage holding) work force has been comparatively spared – so far at least. This means that a relatively small number of redundancies have resulted in property repossessions in the UK. The United States on the other hand, with its lower house prices and sub-prime loans, has high owner occupation rates amongst those hit hardest by redundancy. They have been overwhelmed by foreclosures. Some analysts believe there could be 10 million there by 2012.
There are of course many people here whose lives have been devastated by the recession. Not least tenants in buy-to-let properties that find themselves evicted becasue the landlord couldn't keep up with mortgage payments. A further rise in unemployment could well start affecting larger numbers of owner-occupiers as well. In the meantime at least perhaps we should be grateful that millions of us won’t be losing our homes because we couldn’t afford them in the first place.
When the property market started falling last year there was much talk of what the graph would look like. Would it be a quick down and up “V”, a slower “U”, a down up down and up “W”, a down and stay down “L”, or my particular favourite analogy a down, stay down, then up “skip shape”.
A year in, with talk of property prices and stock markets rising, and banks back in the black, it is now apparent that the “U”, “L” and “skip” property markets are not on the cards. We may have a quick “V” downturn after all. To many people three months of house price rises have come as something of a surprise. The flood of repossessions was less extensive than feared, and with fewer properties on the market, those that are available have scarcity value. Phew, that wasn’t so bad was it, lets crack open the bubbly.
Well hold on there is still the possibility that this may be the middle up slope of the “W”. Or indeed a shape we haven’t even thought of yet. As I reported here last week the property market in the United States, which started falling six months before ours, has taken a real battering. And although there is no guarantee that ours won’t follow; one little discussed factor may have saved our housing market from meltdown. Ironically it is one that is usually spoken of as its greatest weakness – unaffordability. This problem has resulted in younger people being priced out of owner occupation. Indeed in 2007 the average age of a first time buyer had reached 34, up seven years since 1977. Now as it so happens, it is that same age group that have been hit hardest by the recession. Increases in unemployment have been greatest amongst the young . The older (mortgage holding) work force has been comparatively spared – so far at least. This means that a relatively small number of redundancies have resulted in property repossessions in the UK. The United States on the other hand, with its lower house prices and sub-prime loans, has high owner occupation rates amongst those hit hardest by redundancy. They have been overwhelmed by foreclosures. Some analysts believe there could be 10 million there by 2012.
There are of course many people here whose lives have been devastated by the recession. Not least tenants in buy-to-let properties that find themselves evicted becasue the landlord couldn't keep up with mortgage payments. A further rise in unemployment could well start affecting larger numbers of owner-occupiers as well. In the meantime at least perhaps we should be grateful that millions of us won’t be losing our homes because we couldn’t afford them in the first place.
Tuesday, December 02, 2008
Squatting Your Own House
ITV news last night reported the first UK case of a phenomenon that is taking hold in the USA; squatting your own house. Or perhaps more accurately squatting your ex-house.
The couple from Kent are one of almost 30,000 households who have had their house repossessed this year. This is a dramatic rise from last year when 12,000 were repossessed all year. What the Kent couple found was that once their house was in the hand of their bank nothing more happened. Their ex-house joined the ranks of Britain’s 939,000 empty homes. After a few weeks of looking at it sitting there doing nothing, they thought “what the hell” and broke back in and took up residence. They’ve even put the Christmas decorations up. The bank doesn’t seem to have noticed. Or at least hadn’t until it was broadcast to the nation last night.
The lenders have discovered that repossessing people’s homes is only the start of their problems. Apart from the obvious human misery for the households, and public relations disaster for them, they have found that in a falling housing market they can’t find anybody to buy the repossessed houses. In fact of those 30,000 repossessed homes, the lenders have admitted that at least 6,000 are unsaleable. Given the speed of the current housing market you can be pretty sure that the vast majority of those 30,000 are still empty.
In this context the newly nationalised RBS announcement yesterday that repossessions would not start for six months after households fell into arrears, looks less like altruism and more like cold reality. Bankrupt banks turfing bankrupt households out of their homes into the street in order to leave them empty doesn’t feel like a policy that helps anybody.
The couple from Kent are one of almost 30,000 households who have had their house repossessed this year. This is a dramatic rise from last year when 12,000 were repossessed all year. What the Kent couple found was that once their house was in the hand of their bank nothing more happened. Their ex-house joined the ranks of Britain’s 939,000 empty homes. After a few weeks of looking at it sitting there doing nothing, they thought “what the hell” and broke back in and took up residence. They’ve even put the Christmas decorations up. The bank doesn’t seem to have noticed. Or at least hadn’t until it was broadcast to the nation last night.
The lenders have discovered that repossessing people’s homes is only the start of their problems. Apart from the obvious human misery for the households, and public relations disaster for them, they have found that in a falling housing market they can’t find anybody to buy the repossessed houses. In fact of those 30,000 repossessed homes, the lenders have admitted that at least 6,000 are unsaleable. Given the speed of the current housing market you can be pretty sure that the vast majority of those 30,000 are still empty.
In this context the newly nationalised RBS announcement yesterday that repossessions would not start for six months after households fell into arrears, looks less like altruism and more like cold reality. Bankrupt banks turfing bankrupt households out of their homes into the street in order to leave them empty doesn’t feel like a policy that helps anybody.
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