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Repossessions Fall Again

18th August 2009 | back to article listings BACK    print this article PRINT

Members of repossessions are now falling with numbers down from 12,700 in the first quarter of 2009 to 11,400 in the second quarter

This fall is primarily due to government pressure on banks to hold back repossessions but there is still a significant effect from the sale and rent back market in these figures. Sale and rent back prevents repossessions by the homeowner selling their house to an investor just before the repossession occurs.

Recent FSA legislation to regulate the sale and rent back sector will have decimated this industry as it requires fit and proper checks on all individuals operating in this market, the requirement for them to be fully FSA regulated under interim permissions and the need for a full professional business plan. Most people operating in the sale and rent back market in the second quarter of 2009 will find it very difficult to satisfy these criteria.

The result of this is that we expect repossession numbers to actually start turning up potentially in the second half of the year. If this happens it is because the effect of sale and rent back on repossession numbers was larger than previously reported. If it doesn't happen then it shows sale and rent back in fact had little effect on the market.

Overall the CML forecast for 75,000 repossessions for 2009 which they later revised down to 65,000 is probably still wide of the mark. Our forecast of 55,000 to 65,000 could turn out to be too high itself if sale and rent back didn't have the effect that we thought it did on the market.

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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