Middle-classes rush to downsize
Record numbers of middle-class homeowners with £500,000 plus properties are desperate to offload their homes as the economic slump hits ‘white collar’ workers hard.
Rising unemployment, combined with falling house prices and tighter household budgets, has forced thousands of homeowners to downsize to smaller properties and release much needed equity from their homes. However, the stagnant market has made this increasingly difficult, forcing many to resort to quick sales – often at a discount – rather than risk repossession.
Unlike previous recessions seen at the end of the last century, the current crisis has hit the middle-classes harder than other social-economic groups, with City and finance workers among the most at risk of unemployment.
Property Portfolio Rescue, which specialises in securing quick sales for homeowners, says the number of customers with homes worth more than £500,000 has jumped by 22% over the past year. It is now seeing record levels of enquiries from “distressed” homeowners.
Nick Hopkinson, director of Property Portfolio Rescue, says fear of redundancy is forcing homeowners to take action to secure future income and reduce their debts.
“Many of these owners of ‘prime location’ properties have already experienced previous sales falling through, often several months down the line and are now suffering from the consequent further drop in house prices,” he adds. “Previously, this group of desperate sellers did not make up a significant proportion of our enquiries, but this recent activity provides a clear indication that the cycle of recession is really biting now across the whole UK economy.”
Meanwhile, calls continue for the government to do more to help homeowners. With chancellor Alistair Darling due to deliver his Budget on 22 April, expectations of a rescue plan remain high.
Robert Sinclair, director at the Associaiton of Mortgage Intermediaries, says property owners with low or even negative levels of equity are in danger of losing their homes.
"We are now waiting for the chancellor to grasp the tiller and provide direction for the UK mortgage market and help the thousands of ordinary people trapped by the continuing lack of liquidity in the mortgage market,” says Sinclair.
A homeowner’s worst nightmare; repossession is an action of last resort by mortgage lenders to recover money from borrowers that have failed to keep up with repayments on their mortgage or other loan secured on their home (see secured loan). Repossession is a legal procedure that has to go through several processes before the homeowner is evicted and the property reposed. These are: if a borrower keeps defaulting; the lender applies for a solicitor’s notice; the lender instigates possession proceedings through the court; at the court hearing a possession order is granted and sometimes a possession warrant; a bailiff is appointed and an eviction notice issued at which point the homeowner has two to three weeks to vacate the property.