13 November 2008
Many homeowners failing to keep up with payments on their properties are facing repossession, official figures show.
Among the regions with a high rate of repossession is Buckinghamshire, with Ministry of Justice statistics revealing that 107 mortgage repossessions were issued by High Wycombe county court between January and April this year. This marks a 26 per cent increase on the same period last year.
On a national basis, figures from the Financial Standards Authority reveal that 11,000 people lost their homes in the second quarter of 2008, a figure that stood at 6,476 in 2007.
In Buckinghamshire alone, the number of landlord possession claims rose 11 per cent to 88 at Wycombe court, showing that the problem really is evident throughout the country.
Buckinghamshire alone has seen a 17 per cent rise on the national average, illustrating the effects of the global credit crisis.
Industry experts see this as a trend which is unlikely to be reversed in the near future, with estimates from the Council of Mortgage Lenders advising that 45,000 properties nationwide are likely to have been taken in to possession by the end of this year. Out of a total 11.7 million mortgages, this represents a rate of 0.38 per cent.
Michael Coogan, director general of the Council for Mortgage Lenders, comments: "No one wants to see repossessions rise. But risk is a part of life and for some households circumstances change and they cannot get back on their feet."
This sentiment is echoed by former housing minister Caroline Flint, who says that advice for those at risk of repossession needs to be in place should they wish to seek it out.
Last month, prime minister Gordon Brown urged mortgage lenders to only use repossession as a "last resort". The measures were in place to make lenders prove in court that they had taken the necessary steps prior to the hearing to ensure the borrower had the opportunity to negotiate.
However, this week it has become evident that such plans have been disregarded, with a high court ruling giving mortgage lenders the power to repossess homes without needing to apply for the necessary court order to do so.
The ruling backed the plans from Gmac-RFC, which proposed that receivers should be appointed to auction properties off. At the trial, the judge said the move has "wide-ranging implications", with experts believing it to be unlikely that it would be used by residential lenders.
It is, however, an option available to any mortgage provider, which may put homeowners at a greater risk of repossession if they fail to keep up with repayments.
The principal solicitor at housing charity Shelter believes that even if such a case is taken to court, laws are heavily weighted in favour of the lender, which may spell further bad news for those who have taken out loans against their properties.
Francis Walker, of Consumer Credit Counselling Service, tells the Times: "This case is shocking and extremely disappointing, particularly in light of the government's new protocols announced last month.
"The fear is that the practice could become more widespread as the housing crisis worsens."
It is not only those who are strapped for cash who are at risk of repossession. Earlier this month it emerged that Sandbanks, one of the most expensive places to live in the world, has seen the repossession of two properties.
The prime location - situated in Dorset - had two properties worth over £1 million each repossessed as their owners failed to keep up with repayments.
Nick Hallchurch, associate in the B P Collins property litigation practice, comments: "We are seeing more and more cases where our client's tenants are failing to meet rental obligations under the terms of their lease and we are being instructed on an increased basis to seek to recover the arrears and seek possession of the property. In addition, this adds to the rise in the mortgage repossessions and the Courts are being inundated with such claims that the backlog is starting to drag on.
Landlord's and agents need to be more vigilant when tenant's fail to meet a rental payment and take action at the early stages to ensure that the arrears do not mount up to a considerable level. There are various options available to the landlord and they need to ensure that their tenancy agreements cover the ability to claim interest, recover legal costs and they may need to review the level of deposit taken to protect themselves.
In line with the Civil Justice Council's Guidelines issued on 22 October 2008 mortgage lenders will have to demonstrate that they have discussed alternatives to repossession before proceeding with the action and prove that all other suitable options have been exhausted first. Whether the Courts take heed will depend on the individual Judges and it will be a long time before there is uniformity and certainty for cash strapped homeowners. We would recommend people don't bury their heads in the sand and try to discuss this with their lenders at an early stage if there is any risk of action being taken."
Consequently, homeowners are urged to address their financial worries as soon as possible to avoid repossession. Get sound legal advice from Nick Hallchurch and the property litigation team at B P Collins by calling 01753 279037 or emailing disputes@bpcollins.co.uk. |
