Terraced houses more likely to be repossessed
Terraces are set to account for four out of ten repossessions across the UK during 2011, according to HML following its analysis of 320,000 live mortgage accounts.
HML has forecast UK repossessions geographically and by property type. London is expected to have a higher than average proportion of repossessions this year (0.34% of all mortgaged properties) and of those properties seized by lenders a higher percentage than anywhere else in the UK will be flats (52% against an average of 24%) and a lower percentage will be detached homes (4% against 15%).
Northern Ireland is forecast to experience the worst overall rate of repossessions in the UK (0.83%). Proportionally, more semis will be repossessed than the national average (27% against 21%) and detached homes (20% against 15%).
In the South West, where the risk of repossession is lower than anywhere else in the country (0.18%), a higher proportion of detached homes will be repossessed than average (21% against 15%) and a lower proportion of terraced homes will be taken into possession by lenders (35% against 40%).
Commenting, HML’s chief commercial and finance officer, Neil Warman said: “Our forecast shows terraces and flats across the UK are generally more at risk of repossession than detached and semi-detached homes.
“This trend isn’t new; terraces and flats tend to be the property of choice for first-time buyers and lenders understand granting mortgages to people who haven’t had one before is riskier than lending to someone with an established track record.
“However, all borrowers have to contend with the rising cost of living, employment uncertainty, stagnant wages and the fall-out from the largest cuts to Government spending for more than a generation.
“There is already evidence these factors are starting to impact on homeowners, as there has been a moderate increase in the number of borrowers whose arrears represent more than 10% of the value of their mortgage. This is likely to feed through into higher repossessions next year, when we are forecasting an overall figure of between 35,000 and 40,000 repossessions.”
Huw Jones, Sales & Lettings Director at Shaws Estate Agents said: “It is widely forecast for the levels of repossessions to increase slightly in the months ahead as the effects of the Government’s austerity measures take hold. It should however be noted that the numbers, whilst representing terrible situations for the individuals involved, remain low in comparison relative to the size of the market.
As has been stated by HML, it is likely that property in the lower prices ranges will represent a higher proportion of property that gets repossessed simply because these tend to be the properties that are purchased by those with less equity and who are highly geared.”
