Property Repossession, by Jon Nuttall

Repossession is a term used to denote a financial institution taking back an object / asset that was either used as collateral or rented or leased. Repossession is a “self-help” type of action in which the party having right of ownership of the property in question takes the property back from the party having right of possession without invoking court proceedings. The property is then sold on by either the financial institution or 3rd party sellers.

When a borrower takes out a mortgage there is always a risk that repayments become unaffordable for one reason or another and so mortgage arrears start to accumulate.  This can be very stressful for homeowners as the rules surrounding repossession are not considered common knowledge and the fact that all lending institutions work with different parameters adds further mist to an already cloudy situation.

Lenders are under pressure from the FCA [Financial Conduct Authority] not to repossess property unless absolutely necessary on the basis that it regularly leaves homeowners with no where to live putting more pressure on Councils and Housing Associations to re-house these individuals and families.

If you find yourself unable to maintain your mortgage repayments, the first step is to speak to your lender as soon as possible.  The lender will be able to talk about your situation and help you avoid losing your home.  Your lender must follow a set of conditions called a ‘pre-action protocol’ to help you keep your home. If your case goes to court, both you and your lender have to prove to the judge that you have followed these conditions.

Your lender must:

-Tell you how exactly much you owe and any interest charges you’ll have to pay
-Consider a request from you to change the way you pay your mortgage
-Respond to any offer of payment you make
-If they turn down your offer of payment, they must explain their reasons within ten working days, and give you 15 working days’ written warning if they plan to start court action because you haven’t kept to a repayment agreement

There are various options your lender must consider and, depending on your individual circumstances, might suggest to help you manage repayments. These may include:

-Extending the term of your mortgage
-Changing from a capital repayment to an interest only mortgage
-Accepting reduced repayments

Bear in mind that these options may not always be in your best interests – it is worth considering speaking to a free debt advice agency if you are at all unsure about how to proceed.

If the situation progresses towards a repossession you may wish to consider selling your property to repay the mortgage and stop the repossession proceedings.

Homeowners who have sufficient equity [ie the outstanding mortgage balance is below the value of the property] regularly sell to specialist cash buyers as in many cases they do not have the time for local estate agents to market the property, find a genuine committed buyer, arrange finance [if necessary], carry out the conveyancing and complete the purchase.

There are a number of specialist cash buyers, one of which is UK Homebuyers Ltd, who are set up to buy property, for cash, very quickly.  UK Homebuyers have completed transactions in as little as 7 days but typically, sales take between 7 – 28 days.  There are a number of benefits to the vendor of using companies such as UK Homebuyers, the main one being the speed, especially when vendors are in the process of being repossessed.

UK Homebuyers have many years experience of buying property and are fully rehearsed in repossessions and more importantly, how to stop them, even in the final stages.  Many of these specialist companies pay all sales related fees and manage the process to completion ensuring the sale completes in a timely manner.

If you are facing repossession and are considering selling your property, I would encourage you to initially speak to a local agent.  Ask plenty of pertinent questions, find out if the market is buoyant and if there is a genuine demand for properties similar to the one you are selling.  I would also urge you to call a handful of cash buyers and find out what they would offer for your property.  Once you have an idea of what you would be likely to receive for your property, it is crucial that you carry out some due diligence regarding the reputation of the company you are thinking of selling to.  There are a handful of firms who have a reputation for reducing the price at the last minute giving the vendor no choice but to proceed in order not to lose their onward purchase / rental property.

Carry out due diligence on the cash buyer, use google to search for any complaints made against the company you are considering dealing with, find out if they are approved member of the Property Ombudsman Redress Scheme & if they have professional indemnity insurance.  Finally, make sure you meet the person you are dealing with.