Lunchtime news Thursday 9 October 2023

The number of people seeking help after falling behind on their mortgages has increased by 5o per cent in the past year. In the three months to the end of September Citizens Advice saw a steep increase in the number of inquiries about mortgage arrears. There was also a 10 per cent increase in the number of people unable to keep up with their fuel payments. Most lenders started repossession action when people were on average four months in arrears, and almost half those seeking help were couples with children, including one in five who are single parents.

Meanwhile house repossession poses the biggest threat to people’s mental health, according to research by a mental health charity. Forty-six per cent of those questioned rate repossession as the event that would most damage their mental health. Even those who could hang on to their home would end up suffering the stress and worry of arrears building up which, according to Rethink, can trigger mental illness or make people who are already vulnerable, worse.

These figures are not deterring cash investors into the property market however. As investors run from the banking system, those with cash for a large deposit and looking for a ‘long term’ investment are hoping for bargains. Buyers have been negotiating reductions of as much as 20 per cent on asking prices if they have the cash. With the market downturn reducing house prices by 15 to 20 per cent on last year’s values, the average income from rents has moved up to around 8 per cent, according to research by estate agents Knight Frank.

The National Housing and Planning Advice Unit has warned regional planning authorities they must acknowledge the impact of second home ownership on the housing market, and should factor it in to regional spatial strategies. If they don’t, they risk creating further undersupply of homes. NPHAU suggests that, as the existing population gets richer and working patterns change, the demand for second homes will continue and is likely to grow.

A survey by a property website has found that city centre flats have seen the largest annual falls in price, with Birmingham Canal apartments topping the list after a 17.3 per cent drop in value. The price falls have not ‘discriminated’ according to how much a property cost in the first place or how desirable an area is. However, it is buy-to-let investors who are hardest hit.

And finally, a property developer is offering his £220,000 one-bedroom flat for sale, asking for a deposit of only 3 per cent. Brian Hughes is offering a rent now, buy later lease option, with the buyer and seller agreeing a price and a future purchase date. The buyer pays rent and additional monthly instalments and the initial deposit and cash built up from the instalments is then used as a deposit to buy the home with a mortgage, on a pre-agreed date. However, experts warn that the instalments are non-recoverable, and the terms of the contract are complicated requiring legal advice.