The world is facing hard economic times and we are all aware that if you do not keep up with payments on your mortgage (or secured loan) that you open yourself up to your home being repossessed.  The lender would then sell your home to recover the debt you owe to them.

If you are an investor, a way to minimise the current cost increases associated with being a landlord and/or property owner is to obtain a property at the cheapest price possible.

The UK experienced 733 mortgage repossessions in the last quarter of 2022, which was a 134% increase on the previous year.

There were also 20,460 Landlord repossession ‘claims’ and 2,850 mortgage repossessions during 2022.

The South East of the country witnessed the biggest increase in repossession (31%) with Wales (up by 4%) and London (up by 3%).  Newcastle have more than doubled the number of repossessions in 2022, with an increase by 360%!!!!  The only ‘City’ with a decrease in repossessions was in Leeds.

This means that, as an example, Newcastle may have a lot of discounted properties right now.  Repossessed properties can often be sold up to 30% below the average market value.  

However, because of the nature of repossession, there can be issues with the properties that might impair the value.  Often in the lead up to a repossession, the homeowner may lose hope that they will retain the property and will therefore not preserve the condition of the property in various ways.

If you are planning to search for repossessed properties to purchase as an investor, it is important therefore to carry out due diligence with even more caution.  Check in particular;

• Roofing – (any signs of damp, moss, light coming through the attic, etc)
• Walls – (check for dampness or cracks)
• Electrical Wiring 
• Windows (this is a large renovation cost)

Also consider the potential ‘benefits’ of purchasing a specific repossessed property.  Such as;

• Is there a loft where you can add value to the property?  Another bedroom or master toilet suite, games room, etc.
• Does the property have a garden?  You could add on a conservatory or open up the outside space for an ‘outdoor office’. Many people are continuing to work from home and outside space is still ranking high on many purchasers tick lists.
• Parking?  Now that many households have more than one car, parking can become a real frustration.  Is there street parking?  Is there a possibility you can lower a kerb and add personal parking, etc
• Is the area being invested into?  Are there future development plans for a new shopping mall, school or road that will increase the ‘popularity’ of that area.

It is important to exercise caution and carry out a full assessment of the potential risks and benefits.  But if you can pick up the right property that can be refurbished or developed to add significant capital you will be on to a winner.