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housebuyer
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Joined: 02 May 2005
Posts: 81
Cash Points ££ 2815.22
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 Posted: Sun Nov 12, 2006 12:40 am Post subject: Buy to letters getting houses repossed ! |
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Found this interest article,
Large numbers of buy-to-let investors are having their properties repossessed and sold off at auction as rising interest rates and over-development of new flats in some areas has meant that growing numbers of property investors are unable to meet interest repayments.
Last week the Department for Constitutional Affairs released figures for mortgage repossession actions entered in the third quarter 2006 of 34,626, a rise of 15 per cent on the same period last year. Mortgage lenders are cagey about what is driving these repossessions and bodies such as the Council of Mortgage Lenders do not differentiate owner-occupier repossessions from buy-to-let repossessions.
But auctioneers report that buy-to-let investors who have had their fingers burnt are accounting for a large slice of repossessions even though buy-to-lets still only account for a tiny fraction of the total mortgage market at just over 8 per cent.
“Currently over half of repossessions are buy-to-let. It has grown significantly,” says Gary Murphy, auctioneer at Allsop, the leading auction house for commercial and residential property.”
“We’ve had at least 2,000 lots this year. It would not surprise me if we had sold 600 repossessions. The more significant proportion of the last 12 months has been from the buy-to-let sector, although in the last two or three months there has been growth in domestic repossessions.”
Auctioneers estimate that the number of buy-to-let repossessions reaching auction will only be scratching the surface as they estimate that the vast majority of repossessions tend to be sold locally by estate agents.
“We are doing more and more sales further afield and most of them are repossessions,” adds Ben Doman, a surveyor at auctioneers Andrews & Robertson. “There are all types but large numbers fall into two categories. One is buy-to-let failures where people have entered the market overenthusiastically. There is a wide spectrum of those both old and new. Another area of the market is at the budget end of the owner-occupier market such as council house right- to-buy cases where people have run into trouble.”
Mortgage brokers report cases of buy-to-let repossessions particularly in new developments where investors may have paid over-inflated prices or underestimated the supply of rental properties from other buy-to-let investors. In some cases inexperienced investors simply failed to take into account costs such as buildings insurance, maintenance and management fees or void periods when the prop- erty stands empty between tenants.
“These buy-to-let people who bought some swish and swanky pad overlooking the river are having to subsidise it out of their own money,” says Chris Coleman-Smith, auctioneer and director at Savills.
Follow link for the full article
http://www.ft.com/cms/s/4f6f4be8-70b0-11db-8e0b-0000779e2340.html |
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Quinn
Saving Enthusiast
Joined: 06 Feb 2005
Posts: 181
Cash Points ££ 2817.02
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| Posted: Wed Nov 22, 2006 3:21 pm Post subject: |
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If and its a big IF the UK housing market follows america then the buy to letters are in for a big shock !
Over there the market in the buy to let sector type housing is typically down some 30% ! |
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