Belfast Telegraph

Repossessed homes sell for less than half of their value

By Margaret Canning

Repossessed homes in Northern Ireland have been selling for around 42% of their 'true' market value, according to a mortgage administration company.

HML's research said foreclosed homes in the province, which are usually sold at auction, were fetching the lowest percentage of market value of any region in the UK between 2008 and 2013.

Scotland and the north of England were next worst affected by low values for repossessions – yet prices were at around 63% of value, much higher than in Northern Ireland.

However, the province has faced the steepest fall in prices since the boom of 2007, with prices down around 50%. In addition, HML has estimated that around 41% of Northern Ireland home loans are in negative equity.

Greater London was least affected, with repossessed homes fetching just under 80% of market value. HML said repossessed homes "typically" sell for between 60 and 70% of true market value.

Damian Riley, director of business intelligence at HML, said many people who had their homes repossessed did not realise that they would still owe money to their lender if the house sold for less than what they still owed.

Figures from HML showed that nearly 200,000 UK mortgage holders still owed money, with an average shortfall of £43,000.

Nicola McCrudden, policy manager at Northern Ireland charity Housing Rights Service, said it was not surprised by HML's report.

"Mortgage debt shortfall is a common problem and the negative equity situation in Northern Ireland certainly doesn't help matters.

"What many borrowers don't realise is that when a property is repossessed they can remain liable for the shortfall debt. Often this amount can be considerable and can lead to bankruptcy."

She said the HRS advised people to try and sell their property privately as this would usually mean a higher sale price.

"Mortgage lenders also operate what's known as assisted voluntary sale where they will work with struggling borrowers to help to sell the property. We believe that this option should be more widely utilised by lenders in the Northern Ireland mortgage market.

"Where possible, people should avoid just handing the keys back as it will probably end up being auctioned. Auction properties fetch much lower prices – often well below market value."

Mr Riley said assisted voluntary sales could help lessen the blow, adding: "As always, we urge borrowers to contact their lender as soon as possible if they are struggling, or may soon struggle, to keep up with their mortgage repayments."

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