House Repossession Hotspots

Surprising as it may seem, home-owners in the South are far more likely to lose their homes than their Northern counterparts. National charitable organisation Shelter have analysed research, presumably drawn from reliable testing, and claim that the boroughs of Dagenham and Barking are at higher risk of suffering from house repossessions.

Interestingly, most of the rest of the top ten so-called hotspots are made of the more usual candidates, those being locations in the North, in particular areas of the North West. Still, three of the ten are given over to areas in and around London and that does but a different spin on things.

Generally those living in the South are viewed as being more affluent that those living in more Northern climes, and whilst many a politician and spin doctor would try to convince you otherwise, the North/South divide does exist. Southerners have always been thought of as better off, as being financially solvent, with access to a higher standard of living than residents anywhere else in the country.

However, Shelter’s current thinking sheds a slightly different perspective on the whole repossession debacle.

In a nutshell, what Shelter are trying to point out is this: no matter where you’re from, or where you live, your mortgage is still your single biggest outgoing. Unfortunately, despite lower interest rates and various attempts by the big lenders/ Bank of England to help out home owners, the cost of living continues to rise. This has a knock-on effect with regard to how far the average wage packet now has to stretch.

Once the tax man’s had his cut, he continues to dip in and out by way of stealth taxes, fuel duty, VAT and interest on loans. Then there are the utility companies, all upping their pricing bands despite warnings to the contrary. And let’s not get started on the rising cost of the weekly shop.

The beleaguered home-owner is left with an ever-dwindling pile of cash, and this then leaves him more open to repossession. Shelter’s advice? Don’t put off the need to discuss your mortgage if you’re starting to struggle. Our advice? What Shelter say.

House Repossessions In The South East

Current property repossessions are at an all time high in the Kent region of Thanet, provoking even more worry and misery for those that are currently struggling to keep their heads above water. Or rather a roof over their heads.

Despite the combined efforts of charitable organisations, bank-led schemes and of course the home-owners themselves, house repossession numbers remain far too high for many, and too close for comfort for others. What’s truly frightening is the fact that one home owner, under threat of eviction, turned to a local mortgage rescue scheme for help.

Due to the fact that the rescue scheme’s wheels turned far too slowly, the home owner found himself despairing, until he turned to the Citizens Advice Bureau. Thankfully, with some help from the CAB, he managed to rescue his situation at the 11th hour and has managed to keep his home and has got his finances back on track.

Unfortunately that’s not the case for everyone in the region and Thanet residents continue to struggle to meet their mortgage payments, and arrears abound throughout the area. Another area of the housing market that’s massively struggling is the rental one, with hundreds of individuals finding themselves evicted due to rent arrears.

According to recently published figures, rental repossession crept up around 27%, and it’s believed, in part, to be due to the 10% year on year increase in rental prices. Looking back over the last few years, demand for rental properties has continued unabated and landlords have reacted accordingly.

Unfortunately the persistent rise appears to have left many renters out priced, thus leading to the inevitable – evictions and the more house repossessions up and down the region. Of course there are some that claim the figures to be disproportionate to the actual number of residents, rental properties in comparison to other parts of the county.

However the figures are what they are and there must be some cause for concern as the recent spate of repossessions have cause the CAB to look into offering a new service to those living in the local area – they’re looking for funding for a project that will allow them to inject direct help to those that need it the most.

If you live in the Thanet region, and you need help in relation to mortgage or rent arrears, or you’re simply looking for some solid financial advice, you can contact your local CAB direct, or visit their website in order to make an appointment.

Move Out of London – Spotlight on Bishops Stortford, Hertfordshire

It was heart warming to see an article in the London Standard a few weeks ago that pretty much covered what I wrote in my move out of London post several months ago. Obviously old pub in bishops stortfordgreat minds do think alike! Apparently Savills, one of the largest auction houses in the UK, has done some research and identified three “Cinderalla” towns where property is cheap, where there are plenty of facilities for townies to appreciate and which are in commuting distance to London. The Standard article does not talk explicitly about buying property in these towns from house auctions, but there are auction bargains to be had in these areas.

One of these Cinderalla towns just happens to be on the very edge of Essex/Hertfordshire border – Bishops Stortford. In fact Bishops Stortford is just a stone’s throw from where I live, so I’d say I know Stortford pretty well. I have to agree that Bishops Stortford does have some things going for it as a commuter town, but the image painted of the town in the Standard is not wholly reflective in my view. Before I get onto why I wouldn’t live in Bishops Stortford, I’ll tell you what is good about Stortford first.

The train journey into Liverpool St takes around 45 minutes and there are some stunning old properties, cottages and the like on the outskirts of the town and in the surrounding villages. New apartment and house building has been going on relentlessly for the last 20 years, so there are plenty of newer properties to choose from if you are after something shiny and new.

It goes without saying that house prices are substantially less in Bishops Stortford than in London, and you will, in general get more square footage for your money. Here is what you can expect to pay in Stortford itself (rather than in one of the surrounding villages) if you buy through a traditional estate agent rather than at a house auction:

  • 2 Bed Flat – 145,000 Min
  • 2 Bed Terraced House – 175,000 Min
  • 3 Bed Terraced House – 190,000 Min
  • 3 Bed Detached House – 260,000 Min
  • 5 Bed Detached House – 450,000 Min

bishops storford house for auctionThe prices are tempting aren’t they? Stortford has a cinema, plenty of shops including a big Waitrose, some great oldy worldy pubs, a few good schools, a swimming pool and a few gyms for the health conscious. One benefit of Stortford that should be made clear is its location. It’s very close to Stansted airport, so for those who need to travel for business or like lots of holidays, it is convenient to be so close to an airport. Bishops Stortford is also within a half hour drive or train journey to Cambridge (23 miles) and is a short drive to Chelmsford (15 miles).

In my view, that’s about it. It’s the surrouthatched cottage stortfordnding villages such as Great Hallingbury, Thaxted and Hatfield Heath that offer the most appeal for me and the best properties, not Stortford itself. These villages are jam packed with character – village greens and beautiful cottages – and none are far from mainline rail.

One thing that those not au fait with Bishops Stortford will not be aware of is its strange culture. Bishops Stortfordonians tend to look down their noses at those around them and believe they are better, richer and cleverer than the wider population (though there is absolutely no evidence for that). There is a lot of drug use in the town with cocaine being the drug of choice, which means plenty of fighting in the town on weekends fuelled by huge amounts of alcohol alongside illicit drugs. There are also some big pockets of deprivation in Stortford and estates that you definitely would not want to go into at night.

So like most towns Stortford has it’s positives and it has it’s downsides. Given the choice I would not live in or bring up my children in Bishops Stortford, but I would happily live in one of the villages. If you’re lucky enough to find a renovation job or a repossessed house to buy in one of those, then I’d say go for it and leave the stink of London behind you.

bishops stortford prximity to london cambridge & chelmsford

Property Auctions And Cheap Houses For Sale

If you want to buy at property auctions in the UK, a good starting point is to know which regions have cheap houses for sale. Despite the fact that many houses are now selling for less than their market value, there are still some areas that outsell others in terms of sale prices. I use property auction houses as a sounding board for no other reason than generally that’s where the real bargain are to be found.

As the fiscal year trudges on, despite the fact that things ain’t looking up any time soon ( re the global slump/crunch/recession, call it what you will), the desire for the buying of houses doesn’t appear to be on the wane. I won’t bore you with the figures, as I prefer not to have to wade through quant’s and stats any time I’m reading up on something I’ve little knowledge in but suffice to say that the UK house buyers market remains pretty buoyant.Conwy – North Wales

That’s supposing that you have the readies to do so in the first place. However, some do, that much is clear and the areas that appear to be benefiting from cheap houses for sale at various property auctions and estate agents are:

  • Wales – Conwy
  • Scotland – East Dunbartonshire
  • West Midlands – Dumfries and Galloway
  • South East – Hampshire
  • East Midland – Derbyshire

So, now you now, are you willing to buy a house in any of the above five regions? I guess that would depend on whether you already live there, want to live there or fancy your chances in the rental market. Whatever you think of it, it is good news. It does support the fact that 2011 is a buyer’s market, despite how gloomy the general financial outlook is for most of us.

Nottingham. The Forest to be exact. No cheap houses for sale in the forest,
used gratuitously due to the stunning vista.

Of course buying a house in one of the top five regions isn’t mutually exclusive with finding yourself living in an affordable town or city. Is Conwy cheaper than say the North East? Is the North East cheaper than living in West Wales? That’s a whole other board game. According to the stats (once again) some of the cheaper areas to live in (that don’t meet the cheapest house price list) are places such as:

  • Staffordshire
  • Nottingham
  • Warrington
  • Cumbria
  • Bedford

The above are but a few of a list of ten and of course you can do your own research and find out for yourselves. It’s always worth testing the market way before you drop a huge wedge of cash into anything significant. Scan the property auctions in the UK – there’s plenty of them, and get onto the mailing lists of the estate agents. A couple of phone calls or a shufty on the internet will get you the details.

It’s always worth checking further afield when it comes to wheedling out the bargain properties that currently litter our suburban melting pots. Let’s face it, the way our current Government is going it’s likely that more of us will be handing our homes back to the banks (read: relinquishing ownership under sufferance) than ever before, and we know what that means don’t we? Yup … even more cheap houses for sale.

Pictures: Wikipedia Commons - Users: Dbenbenn, Fuz

UK Inflation Rises and How They Affect Property Investors

Yesterday, the Office of National Statistics (ONS) reported yet another rise in inflation, up 0.4 %inflation and property investors from the previous month taking the figure to 4.4% and it’s unlikely that things will stop there. Andrew Sentence from the Bank of England advised that inflation “could easily rise above 5 per cent later this year”. So how do inflation rises affect property investors? Is this something we should be concerned about?

It really depends on how much actual cash you have to play with and whether you can afford the squeeze on your finances that an inflation rise implies. When inflation rises it means that the cost of living is higher – your food, utility, clothing and petrol costs are elevated, but it’s not only these daily necessities that are costing more. One of the main reasons that inflation is rising is because of the increase in VAT from 17.5% to 20%, which means that all the goods and services you buy when developing a property to sell on will cost you more.

From surveyors, plumbers, electricians and solicitors to paint, flooring and curtains will all cost 2.5% more than they did previously, if not more (when petrol prices go up goods and services tend to increase in price as well). Now that doesn’t sound a lot, but on a budget of £25k for a property upgrade including fees, where previously £4,375 of that amount would have been VAT it has now risen to £5,000. If you have several properties, the increase in costs for goods and services both from VAT rises and retailers putting up prices will be felt more sharply.

Add to that the high likelihood that inflation increases will lead to an increase in mortgage rates and you can see how your profit margin gets squeezed from all directions. David Kern, Chief Economist at the BCC, said, “It is likely that the MPC will look to restore its credibility and so we can expect interest rates to be raised in the next few months.”

So going back to the original question of how inflation rises affect property investors, we can see that if you have enough cash flow to pay more than you’re used to for goods and services and you can afford a % increase in your mortgage interest rates you will probably fair ok, though with lower profit margins. You will be able to claim these costs back in expenses when you come to filing your Tax Form. The difficulty is that you need to be able to swallow those costs for at least a year until you can claim the amounts back against your earnings.

So ultimately, the healthier your cash flow the better you will be able to manage inflation rises.

Two other important factors to consider when working out a properties’ investment potential and how inflation rises will affect you are factoring in rising rental incomes if you’re investing for buy to let and of course in the first instance, buying property as cheaply as you can.

Thinking of Buying Repossessed Houses? Guzumping is Par for the Course

According to a recent article by the Financial Times, many buyers putting in offers on repossessedgazumping on repossessed houses houses which have been accepted are finding themselves being gazumped by banks and estate agents. The FT makes a bit of a fuss about it but to be honest I don’t think this practice is anything new or something to be overly concerned about.

Bank owned properties marketed by estate agents or auction houses have to, by law, publish offer notices in a local or national newspaper. This gives other potential buyers the option to put in a higher bid (which the bank can accept or not, but why wouldn’t they?) and for the bank to recoup more of the debt owed to them. For the banks and the person who has had their home repossessed, getting the highest possible sale value that they can is a good move. This is especially true for repossessions where there is negative equity in the property.

Imagine how you would feel if your home was repossessed and you knew that the bank had taken a low offer, despite having higher offers on the table, leaving you with more of a debt to the bank than was necessary? Even if there is positive equity in the property the previous owner has the right to expect the highest price it can achieve. Most repossessed homes sell for a good 20 – 30% less than the market value anyway, so having to pay a few thousand pounds more is not going to damage your profit margin too badly.

So while we can all agree that the practice of gazumping on repossessed houses and flats may be inconvenient to the potential buyer (who is in many cases a property investor looking for the cheapest houses s/he can find), it’s par for the course and not something we should be griping about. It’s just a case of pulling our socks up and either putting in a higher offer (which is still probably much less than the market value anyway), or cutting our losses and walking away.

2011 – A Good Time to Invest In Property?

As we move further into 2011 and the country moves tentatively out of recession, we askinvest in property buy to let ourselves whether it’s a good time for the novice/beginner to invest in property. Despite uncertain predictions for the UK property market in 2011, with some analysts predicting a small increase in house prices and others anticipating either a minor slide or no move at all, there is positive news to be found for those thinking about putting their money into property.

Recently the Financial Times reported that Buy-to-Let mortgage deals have never been better. With a few lenders raising Loan to Value (LTV) amounts to the highest levels since the start of the recession, (Kensington Mortgages are offering up to 85% on rental yields over 6.1%); many established banks entering the Buy-to-Let mortgage arena (creating more competition for your business and therefore lowering interest rates) and Buy-to-Let mortgage rates still very competitive, finding one or more cheap houses for sale, upgrading them and becoming a landlord for the increasing numbers of people wanting rental properties, is looking a far more attractive option than it has done over the last 3 years.

If you have enough cash in the bank for a healthy mortgage deposit (15% +, ideally 20% or more), can buy property cheaply through house auctions and have found a location where rental properties are in demand then I think it’s really a no brainer. Savills, one the UK’s largest auction houses see its’ category C properties having the potential for the most stable return over the next 5 years. They say,

“For investors looking to build portfolios with strong income streams that will be attractive to future investors, the strategy of buying good Grade C letting properties with low capital values looks sound.”

In essence what Savills is saying is that rental prices are increasing, mainly due to the fact that less first time buyers are able to get on the property ladder; the demand for rental properties is higher than ever and properties in less than prime locations and/or condition, which tend to command lower rents, are attractive to those renters taking a hit caused by higher inflation. Savills anticipate a return of 30% over the next 5 years if their predictions are correct.

So whether you would describe the current housing market as stable or stagnant, property is still a viable investment opportunity for those looking for long term returns and 2011 may just be a good time to take the leap.

House Repossessed? In Debt? Tough Luck!

I got an interesting news letter into my inbox this week, something which may be of interest to those on the verge of a house repossession or for those that are generally in debt and sorely need help and advice.

The Citizens Advice Bureau (CAB) is about to go decidedly pear shaped, due to a large funding cut that’s being put as high as 45%. The cut will effectively put an end to a variety of CAB centres around the UK, the knock on effect being that those who need them the most may now find ourselves batting completely alone.

Back in 2010, Gov Inc. stated that they were looking at abolishing around 200 quangos (Quasi-Autonomous Non-Governmental Organisation), as a means of covering some of the monies they were hoping to recoup by way of nation-wide spending cuts.

Three of the quangos that were up for wipe-out were Consumer Direct, OFT and Consumer Focus. Gov Inc decided to sit their caseloads onto the shoulders of the CAB. Presumably someone somewhere figured that the CAB were able to cope.

Oddly, Trading Standards were also roped in to take up the slack along with the CAB. In the interim, Trading Standards have found that they cannot cope with consumer need, and having prioritised, those that are deemed not important enough are simply not dealt with.

Fast forward to the poor, beleaguered CAB 2011 – who have just discovered that, despite all the guff about spending cuts not affecting front line services (etc etc) and the recent announcement that there would be 27m allocated for ‘face to face debt service’, funding’s being cut anyway.

Here’s a very recent little snippet, presumably delivered with pride (real or imagined, I guess it seemed sincere) and delivered with good intentions that does, in fact, mean absolutely nothing in the face of local governments cutting back on CAB funding:

“It’s vitally important that everyone has access to free debt advice, and I am pleased to announce that the Department for Business will provide the £27 million necessary to maintain the programme of face-to-face debt advice” – Vince Cable, Secretary of State for Business, Feb 2011

Oh … ok.

So let’s see. Gov Inc said that they wouldn’t cut funding for front line services. But they have. Gov Inc said that they wouldn’t allow bank bosses to pay themselves bonuses that exceeded £2000. But they have.

Gov Inc said they would be abolishing around 200 quangos as a means of saving money. But they haven’t. Crikey. In debt? Facing a house repossession? Worried about the future, your career, your prospects?

So long as you don’t expect Gov Inc to actually help you, so long as you realise that lip service is all you’re ever going to get, all will be well. Not for you. Not for me. But at least those at the top, that don’t need help, that already live in a manner to which most of us don’t even have the time to dream about, will be alright Jack.

You are on your own. Don’t say no one told you.

National Debt And House Repossessions Go Hand In Glove

In the final quarter of 2010, house repossessions levelled out at around 7,900 for the closing period. That’s a drop of around 11% on the previous quarter. Good news. However – if the planned cuts as per the coalition manifesto go ahead it’s unlikely that the numbers will continue on the downward trend.

According to the economics and financial experts – the guys and gals that spend their days watching and analysing various markets, national and global spending and determining mid-term predictions – if inflation kicks in right alongside the spending cuts, more repossessed houses could well be on the cards.

The fact is that inflation will have to rise again at some point. As of today (Feb 14th) the inflation rate remained unchanged at 0.50%. However the likelihood of that staying as is was always an unlikely prospect. In many ways, enjoying a successive 23 months of ‘no change’ – whilst welcome – it’s also beginning to feel a little … frightening.

Of those among us that haven’t yet hit the financial wall – the coming year is going to be nothing short of a trial. Just because we haven’t hit it doesn’t mean we won’t with the slightest tip of the scales. Judging on the coalition’s spending cuts (that are now underway) and the likelihood of a rise in unemployment for those hit by the cuts – the future certainly isn’t orange.

Between what Gov Inc have in store for the UK as a whole, the proposed Big Society (getting off to a great start with Liverpool already backing out of being one of four targeted areas to spearhead the campaign) and the potential for more price hikes, pay freezes and benefits cuts the future of the ordinary working man (and woman) is looking ever narrower.

National and consumer debt is spiralling out of control – currently climbing above and beyond the really scary and likely to morph into the super scary in the next couple of years: 65% GDP as of now – predicted to rise to 79% by 2014 at the current spending rate.

Explaining national debt would make for a really long article and right now is not the time but – the biggest cause of debt in the UK is how our government spend our money. Labour doubled our national debt from 40% in 1997 up to the predicted forecast of 2014.

Unless the coalition stops spending and starts repaying the whole country will eventually go bankrupt. This kind of puts our position as the man at the bottom of the pile into perspective. If Gov Inc raise (nay – demand) ‘x’ amount in taxes – and yet spends double that amount – the money comes from investors.

In 2009/2010 £496.1 billion was raised from taxing the British population. The government spent £671.4 billion. That’s an overspend of £175.3 billion. 2011 isn’t going to get any brighter. So – can we expect to feel the strain even more – will there be rise in house repossessions, despite persistent statements from the experts to the contrary?

The simple answer is – yes. Inflation will rise, probably around May. It should rise (it will need to) at least twice more before the year end. Gov Inc need to spend to withdraw – despite the massive cuts they’re implementing, money will still go out of the pot and foreign investors will need to be repaid this years interest on national debt – as well as borrow more to bridge the gap between taxes raised due to the fiscal policy – and the amount need to keep the UK afloat.

How can you help? By not living beyond your means. Debt is debt – even at the lower end of the scale. The more you tighten your belt now, the quicker you move away from what you want and nearer to what you actually need, the quicker you’ll get a realistic hold on your finances.

How much is your mortgage? How much do you spend month to month? What do you owe on credit cards? Do you live in your overdraft? It really is time to take stock. Denial won’t help, waiting won’t help, and the way that the UK national debt and the banking systems are operating – you may well find that there’s no one left to turn to in a few years time.

Do your bit now. Stop spending what you don’t have. Make positive changes, realistic changes. Take your future into your own hands. The more you understand what’s going on around you – the more you will realise that the quicker you take stock, the less chance there is of losing it all in the future.

House Repossessions Set to Rise But Government Cuts Debt Advice Funding

Short sighted is the polite way to describe the recently announced government cuts to the Financial Inclusion Fund and the loss of the 500 specialist debt advisors all of whom are now facing redundancy. The less polite description of this action would be downright stupidity.  With the effects of recent government policies on tax rises and spending cuts starting to affect us all (and with worse yet to come), leading to sharp increases in house repossessions and more people struggling with debt, as well as setting the country up for an almost certain double dip recession, the need for free debt advice has never been greater.

One of the largest organisations who will lose out due to this cut in funding is the CAB. Financial Inclusion money was used by the Citizen’s Advice Bureaux to deliver face to face debt coaching for most vulnerable – those in mortgage arrears due to a change in circumstances, those subject to IVA’s, in fact anyone facing problem debt. The money was also used to train more debt advisors from a variety of organisations. Since 2004, when the Financial Inclusion Fund was first launched, evaluations have found that the services it funded have really made a difference to the lives of people using them – they worked – which is another reason that cutting this fund is an unwise move.

In response to this news, Shadow Cabinet Office minister Tessa Jowell said: ”There are not many better examples of the ‘Big Society’ in action – large numbers of volunteers giving their time to help people resolve their legal problems and find a way out of their money worries. When they say ‘we’re in this together’, what they mean is ‘it’s your problem now, not ours’.”

With CAB’s around the country also facing huge funding cuts from local authorities and from legal aid as well, we wonder how they will manage with the undoubted increase in demand for the free services they provide. Those facing house repossessions or who need help with mortgage repayments still have some government services to rely on, such as the mortgage rescue scheme, the mortgage support scheme and the national debt line, but for how long?