North/south home repossession gap closes in England and Wales

The gap between home repossessions in the North and South of England and Wales has closed by 80% since the recession, according to new detailed research.

On average, there were 1.1 repossessions per 1,000 households in the North in the first half of 2015 compared to 0.7 in the South, according to the analysis by e.surv chartered surveyors of court ordered repossessions, a difference of 0.4.

By comparison, in 2008 repossession rates stood at 8.2 per 1,000 households in the North and 5.9 in the South, a difference of 2.3. This means the divide has closed by 80% across this seven year period.

On a yearly basis since the first half of 2014 the North-South divide has narrowed 43%. In the first six months of 2014 there were 2.4 repossessions per 1,000 households in the North, in contrast to 1.7 in the South, with a difference of 0.7, meaning the gap closed at a faster pace over the last year than in previous years.

In absolute terms, across England and Wales total home repossessions have declined by 45% year on year to reach 10,401 in the first half of 2015 from 23,279 as of the first half of 2014. As a result, the average rate of repossessions stands at 0.9 per 1,000 households, compared to a rate of 2.1 repossessions per 1,000 households in the first half of 2014.

However, the report says that despite these improvements, the North is failing to match this average rate across England and Wales, with almost eight out of 10 towns in the regions seeing a higher than average repossession rate.

‘Over the last year, the North/South gap has been narrowing at an accelerated pace. Fewer people are battling unemployment and against this optimistic backdrop, finances are being bolstered across England and Wales by delayed interest rate increases,’ said Richard Sexton, director of e.surv chartered surveyors.

‘Rising wages and negative inflation are making living costs more affordable, giving people room to save. But these economic changes are also having a real impact on those feeling the strain and potentially facing repossession,’ he explained.

‘A healthier lending market is enabling people to search for cheaper mortgage options and regulatory changes, such as the 2014 Mortgage Market Review, are making a real difference in protecting borrowers from committing to potentially unaffordable mortgages in the first place,’ he added.

The details of the report reveal that since the first half of 2014, Bolton has featured in the top 10 worst repossession postcodes. Despite the town seeing a reduction in its repossession rate year on year to two per 1,000 households in the first half of 2015 from 2.8 in the first half of 2014, it still has emerged as the town with the highest incidence.

Within the bottom five, Oldham at 1.6 per 1,000, Liverpool also at 1.6 per 1,000 and Manchester at 1.5 per 1,000, re all in the North West and are all battling high unemployment rates, the report points out.

Alongside Bolton, Blackburn and Newport have also entered the top 10 worst repossession towns across England and Wales over the course of 12 months. Newport saw a repossession rate of 1.4 per 1,000 households across the first half of 2015, and Wales had the third highest repossession rate of all regions Blackburn found itself included in the list with a repossession rate of 1.3 per 1,000 households.

‘There are still some pockets where repossessions are a very real problem. Despite a narrowing divide, the North retains its unenviable position over the South for repossessions, with eight out of ten towns in the region still seeing an above average level of repossessions,’ said Sexton.

‘Economic and jobs progress has been made in the North and promises of a Northern Powerhouse have created a renewed confidence within the area’s jobs market. However, in former industrial hubs like Sunderland and Bolton, home owners are still finding it difficult to make ends meet,’ he pointed out.

‘Public sector jobs cut in the recession have not been reinstated or fully replaced by new opportunities, leaving areas heavily reliant on this sector grappling for more jobs and more economic help,’ he added.

The area most improved on a yearly basis, was Llandrindod Wells, which saw the rate of repossessions reduce by 76% and was just ahead of Bath, Carlisle and Blackburn.

Sexton, also pointed out that while Blackburn may be one of leading areas of improvement, it remains one of the worst postcodes for repossessions, highlighting the long way that Northern towns still have to go in order to normalise repossession rates.

A regional breakdown shows that the North East saw the highest rate of court ordered repossessions across the first half of 2015, with 1.3 repossessions per 1,000 households, the smallest year on year improvement of -50%. This is significantly higher than the England and Wales average of 0.9 per 1,000 households and no town in the region proved immune, as all experienced an above average repossession rate.

Sunderland had the second highest repossessions rate across all of England and Wales, with 1.7 repossessions per 1,000 households. Cleveland also struggled, recording 1.3 repossessions per 1,000 households during the same period.

Just behind the North East, the North West is similarly struggling to reduce repossessions at the same pace as other regions with 80% of its towns with a higher repossessions rate than the average amongst England and Wales. Four out of the five worst towns in England and Wales for court ordered repossessions lie within the region.

London has left behind its prior slow progress concerning repossession rates and has managed to record a significant improvement. In fact, the city has seen repossession rates tumble by 59% year on year since the first half of 2014.

This fall was equalled by the West Midlands and only Wales left London lagging behind in terms of improvement. The first half of 2015 saw 0.9 repossessions per 1,000 households in the capital.

Despite this, the report says that London continues to incorporate great variation when it comes to repossessions. East Central London ranked as the best Greater London postcode area for repossessions boasting a rate of just 0.3 per 1,000 households, down 75% year on year. Kingston upon Thames overtook West London to achieve the second lowest rate of 0.5.

In contrast, Ilford became the seventh worst postcode area for repossessions in England and Wales at 1.5, narrowly beating Romford at 1.4, but both areas improved since the first half of 2014. Only West Central London, out of all postcode areas in Greater London had an increase in repossession rates year on year, seeing a 50% rise to reach 0.6 per 1,000 households, from 0.4.

‘Repossession rates in London continue to pose a conundrum. Without doubt, the capital has improved and is no longer lagging behind other regions. But as repossessions fall across the city, you only need to scratch beneath the surface to find that disparities continue. Behind the visible signs of prosperity in London, there is real poverty and within these areas, repossessions remain high,’ said Sexton.