There is a growing divide between the North and the South of England where repossessions are concerned.
The further north, the higher the number of repossessions, the same is also the case in Wales.
Effectively, in the UK we have two different economies and as a result homeowner arrears in the North and in Wales have been consistently higher than in the South of England. This is driven by lower wages, less job security, lower house prices and rental rates and a generally worse economic performance.
Lower wages mean that northern and Welsh borrowers are more likely to hit problems with arrears and then have fewer options to extricate themselves from the problem.
This is reflected in lower house prices; the lowest house price for a property repossessed by Spicerhaart Corporate Sales was just £20,000.
North vs South
Comparing the parts of the country, we move from 55 repossession claims per 100,000 househoIds in Barrow in Furness, Cumbria, to just two claims per 100,000 households in Waverley, Surrey according to the Ministry of Justice (MoJ).
Repossessions themselves hit 23 per 100,000 in South Lakeland, Cumbria, while, according to the MoJ, in 93 local authorities, mostly in the South and East of the country, there were no repossessions at all by county court bailiffs.
Higher house prices and higher rents in the South provide mortgage holders with more options – and much of this goes under the radar. Someone who finds they can no longer pay their mortgage but lives in a larger house, has the option of taking in a tenant for example.
Hidden from lenders
They may also have the option to move into somewhere cheaper and rent their property out at a level that will cover their mortgage, often with extra to spare. This is usually without the knowledge of the lender, so any problems the borrower might be having is therefore unreported on.
Where repossessions are highest in the South however is landlord repossessions. According to MoJ statistics, London local authorities account for 16 of the twenty boroughs with the highest rate of landlord repossessions, with Newham at the top of the list. At 259 per 100,000 households, this way outstrips the number of residential mortgage repossessions.
The reason for the higher repossession?
Not only is there a higher proportion of rented properties in London and the South, there is less reputational damage from a lender’s point of view when repossessing a buy-to-let property than a homeowner residential property.
So there are fewer barriers to taking action, although it is still likely to result in a family with nowhere to live as it is the potential tenants who are affected.
Ultimately it is clear that we still live in a two-tier society.
Arrears and repossessions as a whole are falling, but it is in the areas where both wages and house prices are lowest that repossessions are highest, highlighting again the north-south divide when it comes to wages and affordability.