Alarming rise in house repossessions

5:20pm Friday 21st November 2008

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AN ALARMING rise in families on the brink of losing their homes was revealed today, providing further evidence of the recession biting across the region.

County courts reported a 25 per cent increase in the number of repossession orders made by lenders against householders unable to pay their mortgage bills.

The leap in seizure orders, in the three months to the end of September, was much higher in some areas - including in Teesside (29 per cent), York (12 per cent) and, most alarmingly, Sunderland (70 per cent).

The grim figures triggered fresh calls for Chancellor Alistair Darling to unveil a rescue plan for homeowners when he presents his long-awaited pre-Budget report to MPs on Monday. (24th) One hint last night was that the government would force the banks to give every homeowner a “three month amnesty” - allowing them to miss three payments before starting repossession proceedings.

However, housing minister Margaret Beckett pinned much of the blame for the crisis on the families themselves - for failing to alert their lender that they were in financial trouble early enough.

Ms Beckett said hailed an 85 per cent success rate in courts where the government had set up desks to allow alternatives to repossession to be explored in the minutes before the case begins.

But she said: “People cannot access any advice, any help, any support, if they don’t tell anybody.

“These are people who have actually got to the door of the court - the court order is going to be heard that morning. If only they had gone to someone earlier.”

The statistics, released by the Ministry of Justice, follow months when the cost of mortgages soared - and the availability of deals shrank - as a fall-out from the credit crunch.

A court order for possession of a home does not necessarily mean that a family will lose its property, because the borrower can make a plea for the lender to alter payments.

However, the numbers hit with a possession claim - the first stage of threatened action - also soared, including in Bishop Auckland (23 per cent), Consett (19 per cent), Teesside (15 per cent) and Darlington (14 per cent).

Nationwide, there were 29,938 orders made - up 24 per cent on the same period of 2007 - of which around half were suspended, allowing the borrower time to catch up with repayments.

Separate figures, issued by the Council of Mortgage Lenders, revealed that actual repossessions jumped by 12 per cent between July and September, to 11,300 homes.

Adam Sampson, chief executive of housing charity Shelter, warned of "severe shocks to come" - with increases in unemployment, negative equity and defaulting on buy-to-let mortgages.

He said: “Lenders may claim they are using repossessions as a last resort, but they must not pat themselves on the back too soon as both repossessions and arrears are still continuing to rise.”

Both the Conservatives and Liberal Democrats demanded action. Tory housing spokesman Grant Shapps said: “These worrying figures show that far more needs to be done to stop families being thrown onto the streets.”

A £200m scheme to allow homeowners in trouble to switch to renting has been widely criticised as inadequate. As few as 300 families in the North-East and North Yorkshire will be helped.