Socialist Worker

Horror of home repossessions is returning today

by Yuri Prasad
Issue No. 2122

Imagine paying a mortgage for years and then being forced to hand your home back to the bank for no money, while you and your family are made homeless.

That is the prospect that threatens thousands of households in Britain as economic recession takes hold.

A combination of growing unemployment, wage freezes, high levels of debt and a collapse in house prices means that the spectres of negative equity and house repossessions are once again stalking Britain.

In the 1990s a steep and sudden drop in house prices meant that many people found themselves paying high mortgage repayments on property that had substantially dropped in value – making the prospect of selling their homes nearly impossible.

This negative equity, combined with an economic downturn, brought misery to millions.

Teacher Carole Mead and her family were among those affected. “My experience was a nightmare that no one else should have to face,” she told Socialist Worker.

“In 1991 myself and my partner bought a small flat in Newcastle’s West End for £32,000.

“Within a few years we had two children and wanted to move to a bigger place, but by then our flat was worth just £12,000.

“We tried everything to sell it, including dropping the price to £9,000, but there were no takers because no one would offer a mortgage on the property.

“In the end we were forced to declare ourselves bankrupt and hand our keys over to the bank. We got nothing for the flat, even though we had paid the mortgage for five years.”

After handing over their property, the bank continued to hound Carole, even demanding that all of her pension contributions be handed over.

With house prices expected to fall by as much as a quarter over the next few years, and a mortgage repayment crisis already taking hold, it is estimated that 2008 will see a 50 percent increase in the number of home repossessions.

But for some the news is not all bad.

According to Gary Murphy, an auctioneer at the firm Allsops, repossessions create opportunities for the wealthy.

“A two-tier market is developing, in which many auction properties are those on which it would be a challenge to secure a mortgage. Demand from owner-occupiers and first-time buyers is falling away in favour of investors who have access to cash,” he says.

But for Carole, the story is all too familiar.

“All those property development programmes on TV are there to sell you a dream of home ownership,” she says.

“But it’s a sham. Not one of them told their viewers that the bubble would burst, let alone what would happen to them when it did.”

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Article information

Tue 7 Oct 2008, 18:07 BST
Issue No. 2122
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