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Repossessed properties sell for 35% below true value

Adam Williams
Written By:
Adam Williams

Repossessed properties sold in the six years since the financial crisis sold for around 35% below market value, figures from HML have shown.

Figures varied dramatically in different areas of the UK with Northern Irish properties being hit harder than anywhere else. In the nation repossession properties sold for an estimated 42% of true value.

Scotland, the North West and the North also struggled with the typical home fetching 63% of its actual value.

London properties were the least affected although still only made 78% of their real market value. This meant repossessed properties in the capital were left with a 22% estimated mortgage shortfall.

HML estimates some 188,000 former mortgage holders in the UK still owe their lender money after facing a repossession shortfall.

Damian Riley, director of business intelligence at HML, said: “Many repossessed Britons do not realise that they may still owe their former mortgage lender money if the property sold for less than the value of their mortgage.

“As our recent shortfall debt regional figures noted, over 188,000 former UK mortgage holders still owe their former mortgage lender money, with an estimated 83% of repossessions in shortfall, with the average shortfall of £43,000.

“One reason for the difference in shortfall positions across the UK is the ‘forced sales discount’ i.e. the reduction in sale prices of homes that have been repossessed, compared to the wider market. This observed drop in price is as a result of the deteriorating condition of empty repossessed properties once utilities are disconnected and general maintenance reduced or stopped.”