Print friendly version 15 Aug 2008

Repossessions situation ‘not akin' to early 1990s

The number of orders made to repossess UK properties has risen by 24% since the second quarter of 2007, according to figures from the Ministry of Justice.

There was also a 4% increase in the number of orders made between the first and second quarters of this year, with a total of 28,658 orders made by courts for possession of a residential property. This does not always result in repossession however, as the parties can still negotiate a compromise. A total of 48% of mortgage possession orders were suspended, compared to 46% in the second quarter of 2007 and 47% in the first quarter of 2008.

Mortgage possession claims hit 39,078 in the second quarter of this year, 17% higher than in the same period last year but at the same level as the first quarter of 2008. When a claim is issued, it means a claimant has begun a court action for an order for repossession of property via the county courts.

The figures for landlords have continued to decline however, with 37,609 landlord possession claims issued in the second quarter, 2% more than in the second quarter of 2007 and the same as the first quarter of 2008.

In terms of orders made, there were 28,042 landlord possession orders made over the same period, 8% more than in the second quarter of 2007 and 1% less than in the first quarter of 2008. However, 40% of landlord possession orders made were suspended in the second quarter of 2008, compared to 39% during the same period last year and 41% in the first quarter of 2008.

Peter Williams, executive director of IMLA, said: “While arrears and possessions are clearly on the up, this is no mortgage meltdown akin to what we saw back in 1991.

“There’s no doubt that with rising food and fuel prices, people have less spare cash. But the pain of this slowdown will be short and sharp. In the past house prices have been driven down by a lack of demand. But house prices have come down rapidly in the last year because mortgage finance has dried up – this is a very different type of adjustment for the UK economy. Normally a self-correction in the housing market feels like an elastoplast being peeled off very slowly. What we’ve seen over the last twelve months is a quick, sharp rip. That should mean recovery comes more quickly than it has in past housing slowdowns.”

Speak to your lender or seek independent advice if you are sturggling with your mortgage repayments.

Click here for more information on arrears.

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