Continuing the series in which our Clinic experts provide a guide to those thorny issues that can trip up the unwary. This week, Lorna Vestey on buying a repossession. Repossessions are supposed to sell very cheaply but how do I go about finding one? Lenders used to publish lists but don’t any longer, partly for PR reasons and partly to avoid damaging potential sale prices. However, it is still worth asking them if they’re selling any repossessed properties in specific areas as they may give out information on request.
Some use estate agents — who will generally tell you about any they are listing — and some sell by auction. Auctioneers don’t always mention in the catalogue that a property has been repossessed, but when you view there are clues: unoccupied, perhaps with new locks, no heating and the water turned off (factor utility reconnection charges into your costs).
If all else fails, there are websites (try www.eigroup.co.uk) that collate information on repossessions but they do charge a subscription fee. Ar e there downsides to buying a repossession? Financial problems may have prevented the previous owners from maintaining the property and occasionally some cause damage or remove fittings. Debts attached to the address shouldn’t damage your credit rating but keep a watch on this (0844 481 8000; www.experian. co.uk) so that you can have any necessary corrections made. And open post for the previous occupiers as you will need to inform creditors that they have moved out and you are the new owners. Otherwise you’ll find bailiffs turning up at your door. What about the buying process? Lenders have an obligation to obtain the best possible price for properties they have repossessed. For open-market sales, they will usually accept your offer, then put a notice of offer in the local press to invite higher bids by a certain date, usually within seven days but sometimes longer. Even then you cannot rely on them refusing a late higher bid, so request in writing the opportunity to match any subsequent offer. Ensure that you have a good solicitor so you can exchange contracts quickly. Is buying a repossession a good idea? It all depends on the property, so research the market. There are certainly bargains now, some repossessions and some not. Beware of clusters of repossessions in particular locations; this may signal a local over-supply. Such properties will take longer to recover value and are likely to be poor rental prospects in the meantime. Most owners will have unsuccessfully tried to sell or let the properties themselves. The Complete Guide to Buying Repossessed Property Bargains: All You Need to Know About Buying a Repossession by Catherine Dawson (Lawpack Publishing £14.99) may be useful.
Lorna Vestey is a former partner of a blue-chip London estate agency.