Auctioneers neither want nor expect the decline in the residential market to precipitate a flood of forced sales through the nation’s salerooms.
For many, the spectre of what promises to be a messy repossessions saga is not one with which there is any advantage in being associated.
The image of the auction as a method of last resort is one they are glad to have shaken off.
“The slowdown in housing market activity has meant that those wishing to sell their dwelling because they are unable to meet repayments have been unable to do so and have thus moved into an increasingly serious situation,” says the Council of Mortgage Lenders. Auctioneers are aware that if mortgage holders cannot dispose of their properties in the auctions room, they are unlikely to have any more success.
But the sheer scale of potential business may well tempt some to take their chance. According to the latest figures from the CML, the second half of last year saw the number of properties taken into possession rise by 17% to 7,430, while the number of loans which were six to 12 months in arrears rose to a record-breaking 58,380. “In relation to loans outstanding, this is the highest figure since arrears peaked in the first half of 1986,” says the report. “The number of mortgages more than 12 months in arrears rose by 31% on the mid-year total and at the end of the year stood at 12,100.”
Stickley & Kent are already in the repossessions market with a “one-stop” service aimed at what the company describe as urgent sellers, liquidators, receivers, and mortgagees.
The company’s chief executive, Norman Mazure, believes that the auction is especially suited to these sorts of disposal and has always benefited from the consequences of receivership and forced repossessions.
Others disagree. “The owner-occupied properties now being repossessed are not suitable for the saleroom,” claims Grant Dixon, head of Bigwoods’ auction department.
“Properties in need of refurbishment are what appeal to the dealers and investors, not modernised stock.”
The common claim that the number of repossessed properties being offered as possible auction entries has not increased in the past two years suggests that the market agrees.
“Our professional department has been dealing with a lot more of these cases,” says Eric Peeling of Hindwoods, “but they are then being dealt with by private treaty rather than auction.”
Lending institutions, he believes, cannot risk the accusation of underselling in a market where a sale by auction can mean a final price as much as 20% below what is perceived as current market value.
“They are scared of the public embarrassment,” says Benjamin Tobin of Strettons, “because they will be seen to fail to get back what they lent.”
Banks and building societies seem to be as reluctant to foreclose on problem properties.
“There has been no acceleration in the number of such properties being put forward because these bodies are very frightened of prompting a situation similar to that of 1973,” says Vic Herrington of Willmotts.
“At that time the decision by one or two banks to foreclose rapidly on their commitments flooded the market with properties nobody wanted.”
The statistics suggest that those with the power to make such decisions today seem determined to sit it out in the hope of better times ahead.
According to the CML’s figures, the number of properties being repossessed decreased from 16,090 to 13,780.
Last year, by contrast, the number of mortgages which were 12 months in arrears and not foreclosed on increased from 8,930 to 12,100 in the same period.
