Property Repossessions Rate Drops by Over 50%

The property repossessions rate has dropped by a huge 51% over the past year, according to the latest study by chartered surveyor e.surv.

The firm found that the gap between repossessions in the north and south has almost halved in the last 12 month.

In 2015, repossessions in the north fell to a rate of 2.1 per 1,000 households, compared to 1.4 per 1,000 in the south. This leaves a gap of just 0.7 between the two halves of the country.

In the previous year, the difference stood at 1.3, as the north recorded a repossession rate of 4.1 per 1,000, while the south saw a rate of 2.8. Therefore, the divide between the north and south has now dropped by 46% over a year.

Across England and Wales as a whole, total property repossessions have decreased by 51% in absolute terms, from 39,928 in 2014 to 19,672 in 2015. The average rate of repossessions is now 1.7 per 1,000 households, down from 3.4 per 1,000 in the previous year.

The Director of e.surv, Richard Sexton, comments on the findings: “Repossession levels are retreating, and the narrowing north-south gap is the strongest sign of this decline. Fuelling these improvements has been the triple combination of rising employment, low inflation and a consistently low base rate. More people than ever are managing to hang onto their homes and keep up with repayment schedules. Alongside this, many homeowners are remortgaging to take advantage of the flurry of new deals on offer from lenders. These factors have significantly helped those struggling across England and Wales to get their finances back on track.

Property Repossessions Rate Drops by Over 50%

“The lending market is also playing an important role. This is the era of responsible lending, with prospective homebuyers benefitting from the variety of mortgage options on offer, increased regulatory tests and plenty of advice on how to secure the right deal. The outlook for 2016 seems promising, with increasing numbers of potential buyers finding themselves in a more financially secure position.”

Bolton continues to have the highest repossession rate in England and Wales, a position that it has held since 2004. Within the town, 3.5 per 1,000 households had their homes repossessed during 2015.

Sunderland was not far behind, with a repossession rate of 3.1 per 1,000, accompanied by Oldham at 3.0, Liverpool at 3.0 and Bradford at 2.7 per 1,000 households.

In the north, 73% of towns recorded a higher repossessions rate than the national average. Areas that managed to record a lower rate than average include Carlisle at 1.2, Derby at 1.4 and Leicester at 1.5.

Sexton explains: “The north is battling to change its reputation as a repossession hotspot. Repossessions overall may be dropping, but the reclaiming of homes remains an acutely northern problem. Across the region, almost three-quarters of towns are seeing substantially higher than average repossession rates. Homeowners in Bolton are still, more often than most, struggling to make mortgage repayments and even in Manchester and Liverpool – two of the north’s most prominent cities – repossessions are prevalent. The north has faced heightened challenges to the south in recent years – the loss of public sector jobs, manufacturing industry decline and a tough recession – all of which hit homeowners and potential homebuyers. However, economic conditions in the north are now receiving more attention, with the northern powerhouse initiative and the future promise of devolution drawing more towns into the national spotlight.”

Meanwhile, London recorded the biggest improvement – the repossession rate in the capital dropped by 54% to 1.6 per 1,000 households in 2015, from 3.5 in 2014. The news arrives despite London’s continued struggle with high house prices.

Sexton continues: “London is turning over a new leaf when it comes to repossessions. The capital may boast the country’s highest earners, but still people struggle to keep up with payments. Progress has been made and London’s average repossession rate has more than halved. But there is still cause for concern; some London boroughs are seeing higher rates than the England and Wales average, and there seems to be a fundamental mismatch across the capital. Due to higher house prices, homebuyers and homeowners living in the capital face higher repayments, meaning an unexpected event such as a job loss can have severe financial repercussions more quickly. London is presumed to be the wealthiest region but real poverty remains, meaning repossessions continue.”