This week I read an article from Shelter about a map they have put together to show the UK hot spots for repossession. It reminded me once again of the first thing any property investor learns; the drivers which force people to change their circumstances. These drivers are; death, divorce, debt and downsizing. Any person who is involved in property knows that these are at the core of why people are motivated to move.
So, it comes as no great surprise to me that the Shelter article states the locations for the highest number of mortgage repossession claims is being linked to areas of high unemployment. Of course it is, that files neatly under ‘debt.’ In fact, debt is the biggest driver of all, debt can lead to divorce and visa versa, all of which can lead to repossession. Shelter says:
A third of people are struggling or failing to meet their housing costs.
Other Contributory Repossession Factors
Remember all the glossy TV programs which encouraged people, who were then first time buyers, up-sizing or buying second homes (all with added debt), to stretch themselves to the limit of what they could afford when buying property? I have issue with this for for several reasons. Anyone with common sense would realise that stretching to the limit could store up later issues. Surely this is obvious?
For example, if you bought with a partner and split up how will one person afford the mortgage? Or what if you base your home buying on your job and the company cuts employees or relocates you? The point being, nothing lasts forever, and as a buyer of a major asset, you should always have one eye on the future.
Buying at your limit means you never have any wriggle room. Life has a habit of changing on you, sometimes for the better, sometimes not. Leave yourself some room for maneuver.
Other Bad Housing Issues
Another thing in the news this week were the findings which emerged stating that housing association, and in particular, part buy schemes, are a poor investment, where lots of things can go wrong leaving big problems for the part owner. To me, any form of part buy is generally a bad idea. The schemes are front loaded on price, lock you in to long term fixed rates and are often impossible to get out of if your circumstances change.
They prey on a vulnerable sector of the market- first time buyers, who, by their very definition, often do not truly understand what they are getting themselves into financially, or how low the chances are that they will ever afford the whole property.
Lets face it, the only thing that is certain in life is that change is gonna happen whether you like it or not. Most don’t have the benefit of a crystal ball with an eye into the future, but you can use common sense or get things explained to you if you don’t understand them.
Many did not see that a crash was about to happen, or even that it was inevitable with such a boiling hot, overpriced market as we had. But it did happen, and it’s not over yet by a long way, so if repossession and debt are affecting you, sort it out now, don’t let it drag on for years to come.
You may also be interested in our article about Why You Cant Negotiate Your Debt With NRAM