A new article today on the BBC website shows shocking new figures illustrating the large number of repossessed homes in the UK.

The number of homes repossessed in the UK rose to 12,800 in the first three months of the year, the Council of Mortgage Lenders (CML) has said.

This was up 23% from the 10,400 in the previous three months and 50% up on the 8,500 in the same period last year.

The CML has predicted that 75,000 homes will be repossessed in 2009, almost double the 40,000 of last year.

Read the full article on the BBC News Page

Below are some common questions for property auctions:

Why Should I Buy At Property Auction?
There are numerous reasons for buying at property repossession auctions. All sellers at auction are motivated to sell and want to sell quickly. This often means that they are willing to sell their property at a low price. Often the residential properties will renovation work carrying out which means there is an opportunity for the buyer to make some money and also increase the value of their property. Also once the hammer falls at a property auction there is no chance of going back on a deal so there is a certainty of purchase.

Are there fewer costs in buying through auction or buying through an agent?
In both cases the fees tend to be similar, there will be legal fees and surveyors fees to payas well as any fees to pay in order to arrange finance. When buying at auction you will need to pay an administration fee to the auctioneers which typically falls between £175 and £300 plus VAT.

What type of houses are sold at auction?
The type of properties sold at auction are repossessed properties which have been repossessed by the bank or mortgage company. As a result the properties may be unmodernised or in need of work. These properties are often different to houses sold at normal estate agents as they may not be immediately ready to move into.

What are the risks of buying at auction?
The risks of buying at auction are similar to those of buying through estate agents. It is important to make sure that u have done all of your preparatory work on the repossessed property such as legal searches, checking the title and surveying the property to make sure there are no defects. The important thing to remember is that once the auction is over the deal must be followed through and you are not able to go back to the seller afterwards should any problem arise. There are no guarantees on the purchase and you must buy it as it is.

How do I find a bargain at auction?
The key to finding a bargain repossessed home at auction is to have the maximum number of options available to you. You should search auction sites on the internet and contact auction houses directly. Bargains are often properties which are not so popular, so looking for a property with defects or one which needs work can be a great option. However, its important to have the know how or ability to deal with defects so that it turns out to be a bargain and not an expensive bargain! When buying at auction, many buyers often leave with ownership of their property at a price much lower than what they were prepared to pay and in case this automatically becomes a bargain.

How can I identify repossessed homes at auction?
There are several things to look out for when identifying a repossessed home at an auction. Check the auctioneers catalogue. In some cases it will say “by order of the mortgagees”, in other cases it may actually say who is selling the repossession property for example a bank, so the catalogue will say “by order of HSBC”. In other times it will say “by order of the receiver”. These are all ways of picking up a property repossession home at auction. However, not all properties will have this information in the catalogue. If you suspect the property is a repossessed home, the easiest thing to do is phone up the seller’s solicitor and ask them who is the seller.

What is an N244 Form?
Once you have taken proper legal advice, N244 form is probably the most important document you can have. The form allows you access to appear before the judge again and for a typical cost of £35 . It allows you to have an emergency hearing at any given point, even if you have anb eviction notice the following week for example. It means that you will be bale to appear before the judge to get an eviction turned down.

What Can I Do To Stop My Home Being Repossessed?
The first thing you should do is take advice. We have provided some information of where to get good advice on homes repossession. The judge has no mandate whatsoever to repossess your property and always looks after your best interests. Even if you appear without a solicitor the judge will typically try and help you as he does not want your home to be repossessed. A person whose house is repossessed can then become a burden on the state so the judge will try and avoid this and be on your side. However he is legally bound to use the legal system to seek possession of your property.

Can I Contest a Repossession Order or Eviction Order?
Yes you can contest a repossession order or eviction order. Again you will need a N244 form to get an emergency hearing before the judge. It is important to note that the judge will require some evidence as to why you are contesting. Eg. Remortgage evidence or evidence of sale of the property.

Are there companies that will buy my house and then rent it back to me to avoid repossession?
Yes there are a number of companies on the market who will buy your property and then rent it back to you. each will have different conditions but it must be noted that they are mercenary companies and typically will not pay more than between 65% and 80% of the value of your property. We would usually advise selling on the open market instead, but depending on how fast you need to act and if you want to stay in the property renting your house back from one of these companies can be an option.

How quickly can a repossession be stopped?
A property repossession can be stopped merely by paying all the arrears on the account in full. This will stop an eviction process immediately even if you are at the court stage.

Can I sell my home to avoid it being repossessed?
A home can be sold at any point to any interested parties, even after it has been repossessed provided it hasn’t already been resold.

In the UK, auctions are an excellent place to buy repossessed homes. As soon as the hammer falls the purchase becomes legally binding and an immediate payment of 10% will be required to be paid to the seller’s solicitors. Mortgage companies want to recover losses after home repossession so auctions become an excellent way to sell a property quickly and recover their losses.

For a buyer of a repossessed home, a property auction can be one of the best ways of purchasing a repossession property at a price way below market value. It must also be made clear that the buyer cannot renegotiate a price after the auction is over. Often inexperienced buyers commit to paying over the odds and only find out after a valuation or worse still, a poor survey illustrates some serious problems with the property.

All auction experts advise carrying out full research into a property. They also advise having a maximum bid in your mind on repossession properties and this bid should not be exceeded. A property auction can also be a smooth way of making a purchase, a typical property auction will have 6 or 7 weeks of marketing prior to the event and completion within 4 weeks after the auction. This reduces the chances of delays due to issues of finance, answers to complicated legal enquiries or any other slowdowns. Delays are often common in normal property deals but here properties can be sold and bought in a short space of time.

Repossession auctions can often be extremely competitive and prices often rise over the guide price, so its important not to get carried away in bidding. Experienced auctioneers advise looking out for quieter auctions, if no bids are made on a property it is possible to approach the auctioneers at the end and make a low bid which can be accepted.

The video below should be watched carefully. This is a common mistake many people make when trying to buy repossessed homes at auction. I shouldn’t laugh but i did.

Why Buy At Auction?
Buying at auction can give a purchaser the opportunity to secure a purchase immediately with no possibility of gazumping. It may also offer an unusual or challenging opportunity. However, you must ensure that you know exactly what you are prepared to take on and what you are prepared to pay. It is very easy to get carried away when bidding against others. All bidders must be in a position to proceed with a sale and the 10% deposit must be available at the point of the hammer fall.

In Preparation
- View the property as many times as you need to ensure it is right for you.
- Have a survey and ask a trusted builders opinion of likely costs before setting your budget. You cannot withdraw from the sale at a later date if problems subsequently come to light.
- Make sure you are fully aware of the legal implications and likely costs involved in buying at auction. The auctioneers will have all the documents relating to the property. Ensure you read these in detail or ask your solicitor to do so.
- You must have the full amount you will need to buy the property available. If you are financing the purchase through a mortgage, you must have your mortgage offer and a deposit, typically 10% of purchase price, in place prior to the auction.
- Have buildings insurance prepared in anticipation of a successful bid.
- The auctioneer will advise whether you have the opportunity to submit an offer prior to the auction date. However, you will still need to be in a position to exchange contracts almost immediately in order for the property to be withdrawn from the auction. If you cannot be there on the day of the auction inform the auctioneer in advance, they can either bid on your behalf or convey your telephone bids. It is also possible to send a trusted 3rd party to bid on your behalf but they will need your written consent.

On Auction Day
- It is always advisable to check that the property is still available before you go to the auction.
- Ensure you are aware of any last minute amendments to the catalogue details.
- You will need to bring two forms of identification, your solicitor’s details and your deposit, which can be in the form of a bankers draft, building society cheque or a personal cheque.
- You cannot pay by cash or credit card. You may also be liable for additional auction costs so this will also need to be allowed for.
- Don’t bid more than you can afford or have agreed with your mortgage lender.

When the Bidding Ends
This will mean the property has either been withdrawn because it failed to reach the reserve price or it has sold to the highest bidder.
If the property was withdrawn, it is possible for any interested parties to open negotiations directly with the seller of the property. Your auctioneer will advise you in this instance.
If the hammer falls and the property sells to the highest bidder, the contracts are automatically exchanged and the buyer is liable for the deposit. The balance will be paid upon completion, the date for which will be specified in the legal documentation.
If a buyer or seller subsequently defaults on the sale, they will lose the deposit and may also be subject to legal proceedings to recover other costs.

The Birmingham Post has reported that in 2008 the number of Repossession Houses has soared up by a mammoth 68% in comparison to figures from 2007. This is expected to create further home repossessions in 2009. The Financial Services Authority have stated that “borrowers were increasingly struggling to clear their arrears, and this led to the total number of people who were behind with repayments steadily increasing since early 2007.” You can read about it here.

A new scheme to help people with their mortgages has been designed to avoid repossessions that were seen in the 1990s, the Prime Minister said.

The plan to help recession-hit families avoid having their homes repossessed comes into force on the eve of the Budget.

Some hard-pressed home owners will be able to reduce monthly mortgage payments for up to two years after lenders representing what officials said was more than 80% of the market agreed to offer support.

Gordon Brown told high-ranking representatives of advice and consumer organisations at a meeting at Downing Street: “We want to help people through this downturn. People’s homes are so important to them, and rightly so.

“We don’t want to return to the days of the 1990s, when there were repossessions.”

Details of the institutions signed up – not all of whom had taken up the Government guarantee to cover defaults on deferred payments – will be announced to MPs by Housing Minister Margaret Beckett later.

The Homeowners Mortgage Support (HMS) scheme is designed to offer “breathing space” for struggling households.

Any reduction will have to be made up once the period is over. It is unclear how many lenders offering help are doing so as part of the Government scheme – with a guarantee backed by the taxpayer – and how many are offering “comparable arrangements”.

Mr Brown told representatives of organisations such as Shelter, Citizens Advice Bureau and Which? that some building societies had joined the scheme who they might not have expected to do so.

He said that measures which had already been taken, including help for people with their mortgages if they were unemployed, were helpful.

I Have a court hearing but am unable to attend. What shall I do?
Wherever possible, make every effort to attend. If you have a joint mortgage, only one party need attend. Your home is at risk – so making yourself available is paramount. If you absolutely cannot attend, set out your position in writing, and confirm to the court what you would like to do. iF you are running late for your hearing, phone the court and inform them, the judge will often wait or rearrange the repossession hearing for a later time in the day.

Do I need a lawyer to attend court?
No. You can get one, but they are expensive – typically £130 to 175 per hour plus VAT. This money is often better spent in an offer to repay the arrears. Some courts have Debt Counsellors available at repossession hearings that can help (some Citizens Advice Bureaus provide this service). Ask the court usher upon arrival.

The court has made an order for possession / eviction. Is there anything I can do?
Yes. You can sell your home quickly before repossession, or find a flexible solution which pays your arrears, prevents repossession and allows you to stay in your home. A Quick Sale can help you find a solution which meets these aims.

How quickly can repossession be stopped?
Repossession can be stopped right up to the date of eviction, depending upon your circumstances.

If I hand back the keys, is that the end of the matter?
No. The lender will sell the house. If there is a shortfall, the lender can recover this from you for up to 12 years (5 years in Scotland). Also, you will be responsible for ongoing mortgage interest payments until the sale and the cost of the sale itself. This will include locksmith costs, solicitor’s fees, surveyor’s fees, estate agency fees and utility bills. See our Tips following repossession page to see how you can minimise your liabilities.

Will my credit rating be affected?
Yes. A County Court Judgment will be registered against you, which will remain on the Register of County Court Judgments for 6 years. The lender will also register the repossession on the Council of Mortgage Lenders register which will make obtaining a future mortgage very difficult.

There is a good chance we will not be able to pay our mortgage next month. What should we do?
Check whether you have a mortgage payment protection insurance (MPPI) . This should cover the monthly payments, at least for a year, giving some breathing space to address your financial dilema. Talk to your lender and explain your situation. If you have a flexible mortgage you may be able to take a payment holiday. Ensure you get any social security help that is available and claim any available allowances (unemployment benefit).
Draw up a proper budget listing all your income and outgoings to help evaluate your position. It may also be necessary if you need to get debt counselling.

What are the options available if I cannot afford my mortgage payments?
Talk to a mortgage broker to see if there is a lower cost alternative. Otherwise your lender may be able to offer different repayment options. Although these may reduce monthly payments in the short term, you may end up paying more interest over the total loan as a result. The most common options are: granting a limited payment holiday, reducing monthly payments for a set period, reducing monthly payments by extending the term of your loan or switching from a repayment basis to an interest only mortgage. If you take the latter option you will need to review at a later stage how you are going to repay the capital sum at the end of the mortgage term.

It is clear I can no longer afford my mortgage. Should I just hand the keys back to the lender or should I sell the house myself?
You should not hand the keys over without getting independent advice first. If you do, your debt will probably increase and your name will appear on the mortgage repossessions register making it difficult to get a mortgage in the future. It is better to talk over the options with your lender or mortgage broker.

I have missed a couple of mortgage payments and my lender has written to me. What happens next?
Usually the lender will send a letter after you have missed one or two payments and they will ask you to confirm how you intend to pay off the arrears. If you fail to respond or the lender is not satisfied by your answer another letter will be sent giving you seven days before solicitors become involved. It is better to negotiate with your lender before solicitors. A Shelter housing aid centre or citizens advice bureau can help you do this.

Our mortgage lender has sent us a solicitor’s letter threatened to take us to court because of arrears. What are my options?
You must make contact with your lender and try to sort it out otherwise they are likely to go to court to get an order for possession. If that happens you can attend and could still stop proceedings by coming up with an acceptable offer to clear arrears and maintain payments but you will need to produce evidence to support your proposal (like the offer of a new job). Court costs and those related to bailiffs – if they are appointed – will be added to your debt.

We have been told that bailiffs will be sent to our door. Do we have to let them in?
A letter from the bailiffs will give you seven days to vacate the premises. In a repossession case bailiffs can use any means to enter the premises including reasonable force. They will evict anyone living in the house and change the locks to ensure you cannot get back in.

If we are evicted, what happens to our possessions?
The lender has a charge over the property, not the contents. They must reach an agreement with you so you can collect what is yours. However, if possessions are still in the house when the bailiffs arrive they are removed and left outside the house.

Property prices in our area are falling so even if we are evicted from our home because of mortgage arrears, the sale of the property is unlikely to pay off all we owe. Can we be pursued for the difference?
You can be chased for twelve years from the date of the first mortgage default. However an informal agreement between members of the Council of Mortgage Lenders means they will not pursue after six years.

When dealing with homes repossession there are many words and phrases which are used by solicitors and the courts which most people won’t understand. In order to help you avoid repossession we have put together of some of the phrases and words which are commonly used in repossessed homes cases.

Adjourned generally with liberty to restore – This order is made where the judge makes no final decision about the claim. However, unlike a normal adjournment, the case is not automatically listed for another hearing. Instead, the case is held in suspension unless either party to the claim asks for it to be re-listed – or restored – for another hearing. The word “liberty” in this phrase is considered to be old-fashioned and, in the spirit of making the law easier to understand, the word permission is often used instead. Many judges will now add the stipulation that the claim will be struck out or dismissed if neither party asks for it to be restored within a set period – usually a year.

Chambers – The room, which is more like an office than a formal courtroom, where mortgage possession claims are usually heard. Mortgage cases are not open to the public because they, almost inevitably, include a discussion of a borrower’s personal financial circumstances.

Civil Procedure Rules (the CPR) – The rules which govern the conduct of civil court cases. Part 55 of the rules relates to possession claims and sets out the evidence that must be produced at court by the lender. This includes official copies, (or certified copies,) of the mortgage deed and of the Land Registry’s information about the property. These show the lender’s mortgage and whether there is anyone else who should be told about the claim. The lender must also produce an HRR Search, which shows whether anyone has registered an interest in the mortgaged property due to their relationship with the borrower. This is most likely to apply when a couple has separated and one party has left the home but wants it to be known that they may be entitled to a share of any sale proceeds. The lender is also required to send a notice to occupiers to the property informing any unknown residents that a possession claim has been started.

Costs – Very often there will be no mention of costs during a mortgage possession hearing. This is because the terms of most mortgages allow the lender to recover all the costs of bringing legal action against a borrower who has failed to maintain payments. They do not require a court order to do so. Sometimes judges will say that “costs are to be added to the security”, which has the same effect as if they said nothing – the costs will be added to the mortgage debt. If the judge thinks that the lender has done something wrong he may say that “no costs are to be added to the security”.

Default Notice – see Regulated agreement.

HRR Search - see Civil Procedure Rules.

Mortgagee, Mortgagor – The borrower is known as the mortgagor because he has given the lender – or mortgagee – a mortgage over his property.

Norgan, also Norgan minimum and Cheltenham & Gloucester v Norgan – An important case in mortgage possession law which stated that a judge could, in principle, make a suspended possession order even if it would take the borrower the remaining term of the mortgage to clear the arrears. The terms “Norgan” and “Norgan minimum” are used as shorthand for the amount that a borrower would have to pay each month to clear the arrears over the life of the mortgage.

Notice to Occupiers – see Civil Procedure Rules

Official Copies – see Civil Procedure Rules.

Part 55 – see Civil Procedure Rules.

Regulated agreement – A loan which is regulated by the Consumer Credit Act. Different rules apply to the mortgages which secure these loans. A Default Notice must be sent to the borrower before the lender can start a possession claim. The judge can sometimes grant a suspended possession order even if the borrower cannot afford to pay the full monthly instalment due under the mortgage.

Section 36 (of the Administration of Justice Act 1970) – This contains almost all of the powers that judges have when they consider a lender’s claim for repossession in respect of most types of mortgages. Lawyers will often refer to the “section 36 discretion”, however, section 8 of the Administration of Justice Act 1973 made an important modification to the judges’ powers. Taken together these provisions say that a judge hearing a possession claim can adjourn, make a possession order, suspend enforcement of that order, or stop or delay repossession at any time until the property has been repossessed. However, the judge can only do this if he is satisfied that any arrears on the mortgage are likely to be paid by the borrower within a reasonable time.