Record number of repossessed homes at auction

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by Kay Murchie

Repossessed homes are hitting high levels according to Allsop, Europe’s biggest residential property auctioneer.

In its February catalogue, Allsop is listing 410 lots over 2 days. Banks or mortgage companies are offering nearly 40% of them as distressed sales.

Gary Murphy of Allsop said conditions like this haven‘t been seen since the early 1990s. At the same sale last year, less than 20% of residential properties offered were repossessions.

Mr Murphy added that a large quantity of the lots on offer are repossessed buy-to-let properties. The buy-to-let market has attracted a whole new group of investors in the last decade, however, many of them have not fully appreciated the pitfalls of property investment.

Another residential property auctioneer, Andrews & Robertson, has also reported an increase in repossessions with over 50 in its forthcoming auction.

Traditionally, auctions are the last resort for the distressed sellers or banks and building societies.

Late last year, the council of mortgage lenders (CML) warned repossessions would jump 50% to levels not seen since the early 1990s housing slump as higher interest rates took hold.

The CML said it expected 45,000 repossessions in 2008 - up from 30,000 in 2007. The CML said a growing amount of people are likely to struggle with mortgage repayments this year as a result of the five interest rate rises since August 2006.

Furthermore, a study from MoneySupermarket.com indicates that almost 3 million homeowners are worried that they will lose their home this year amid tightening lending conditions.

The report established that around 1.35 million people are afraid they will be declared bankrupt this year while 6% believe their homes will be repossessed.