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Housing Solicitors

Homeowners in mortgage arrears “should seek help as soon as possible” (3 January 2014)

Date: 03/01/2014
Duncan Lewis, Housing Solicitors, Homeowners in mortgage arrears “should seek help as soon as possible”

The housing sector is currently enjoying a boost as a result of the government’s Help to Buy scheme, which some critics say is fuelling a property bubble in the UK.

Since the second phase of the Help to Buy scheme was launched last October, and the sale of 700 new homes have so far been completed under the scheme, the first part of which was launched in April last year.

The property sector stalled following the banking crash of 2008 and ensuing credit crunch.

The Help to Buy scheme was set up to help first-time buyers get a foot on the property ladder – and also help existing home owners buy larger second properties.

In June 2013 mortgage lenders reported a spike in homeowners taking out second loans on their properties for refurbishment, including buy-to-let properties.

Despite the downturn in the property market in recent years, in November the Council for Mortgage Lenders (CML) reported the lowest quarterly rate of mortgage repossessions for five years.

The CML began recording the number of properties repossessed by lenders in 2008, following the credit crunch. Between June and September last year, a total of six in 10,000 homes were repossessed by lenders and the number of homeowners facing mortgage arrears also fell from 154,900 in June 2013 to 149,400 in September.

Critics of the government’s Help to Buy scheme fear that it may encourage first-time buyers and existing homeowners to take out larger mortgages than they can afford, however.

The upper limit of properties eligible under the scheme is currently £600,000 and buyers can put down deposits of just 5%. If mortgage interest rates were to rise sharply, this could leave many homeowners struggling to repay their monthly mortgage payments. Potentially new homeowners could lose their homes as a result.

However, director general of the CML Paul Smee said in November that even homeowners behind with mortgage repayments were unlikely to lose their homes – and advised homeowners to speak to their lender as soon as possible if they found themselves in difficulties.

“By talking to their lender as soon as possible, most can resolve their temporary problems, without the lender resorting to repossession,” said Mr Smee.

The increase in property prices has also partly been attributed to overseas investment in the UK property market, with foreign buyers snapping up homes in Britain as buy-to-let properties, leaving a shortage of affordable homes available either to rent or buy.

The economic downturn after 2008 also meant fewer new homes were built, including public sector housing.

In recent years there has also been a rise in the number of people renting rather than buying a home – research for the homeless charity Shelter last year revealed that in the southwest of England more families with dependant children are renting homes rather than buying. The research also found many tenants face problems with landlords who fail to carry out essential maintenance to property they rent out, leaving some tenants having to pay for essential repairs to rental property themselves rather than face a confrontation with their landlord which may lead to eviction.


Duncan Lewis Housing Solicitors

Duncan Lewis is a leading firm of housing solicitors and can advise on housing law, including housing possession and mortgage repossession.

Duncan Lewis housing solicitors can also advise on debt, housing benefits, disrepair of rented property, Landlord and Tennant issues, Local Authority housing and unlawful eviction.

For expert legal advice on housing law – including mortgage repossession or housing possession – contact Duncan Lewis housing solicitors on 020 7923 4020.


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