Buy-to-let failures 'fuelling rise in repossessions'
Buy-to-let repossessions are fuelling general rise
Wednesday, 25, Mar 2009 10:41
Property fraud and failed buy-to-let ventures are fuelling the increase in repossessions, a report has found.
Headline figures of a 68 per cent increase in repossessions in 2008 compared with 2007 from the FSA have sparked concerns mortgage lenders are evicting families from their homes in growing numbers.
However, banks are taking measures to avoid evicting homeowners, a report from Datamonitor has found, with many of the repossessed properties buy-to-let, abandoned or used for property fraud.
Roderick Logan, analyst at Datamonitor and author of the research, said: "For lenders, taking possession of a property is likely to be followed quickly by an auction, where prices are likely to remain below the estimated market value as bidders are looking to make a profit and lenders will have no choice but to sell."
The issue is also politically important, with negative press generated if the government is seen to be standing by and allowing families to become homeless.
According to Datamonitor's report UK Buy-to-let Mortgages 2008, a greater percentage of buy-to-let properties had been taken into possession at the end of the first half of 2008 than properties in the mainstream mortgage market.
"As a result, the increase in repossessions is not as bad as the headline figure suggests and can serve to expose activities such as illegal property fraud," Mr Logan said.
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