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Dodgy clubs stoke rise in landlord repossessions

Rogue property clubs are fuelling a rise in buy-to-let repossessions, it has been claimed.

Landlords who have purchased houses from property clubs advertising inflated rental yields are finding themselves unable to attract sufficient rental income to cover their mortgage payments.

Data from the Council of Mortgage lenders shows the number of buy-to-let repossessions rose 12% to 1,900 in Q2 2011 ­ up from 1,700 in Q1.

Ian Potter, operations manager at the Association of Residential Letting Agents, says that buy-to-let purchases made through unscrupulous firms are partly to blame for the increase in repossessions.

He says: “We regularly hear of buy-to-let repossessions and arrears cases arising from rogue clubs and the problem could get worse if we see a prolonged period of economic strife.”

David Lawrenson, founder of Lettingfocus.com, says rogue investment clubs usually advertise properties located in disadvantaged areas where it is difficult to achieve sufficient rental income to cover the mortgage.

He says: “These firms are still around and over the next few years, while economic conditions remain difficult, we will see more of them springing up and the number of associated repossessions rising.

“In the current market, lots of people want to dabble in property investment, which just adds fuel to the fire.”

Paul Shamplina, founder of Landlord Action, says: “We have seen a surge in repossession cases where landlords have bought properties from an investment club and cannot pay the mortgage because the property does not attract the rental yields they were promised.”

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  • lawrence robbins 22nd August 2011 at 8:16 pm

    And some of them also paid to attend seminars to become ‘Property Millionaires’.
    At the point where I got BTL mortgage applications to purchase property in Corby ‘an area of exceptional letting demand’the game was up.

  • anon 22nd August 2011 at 4:01 pm

    ………this is a legacy issues from the ‘good old days’ I’m afraid chaps.

    Clearly nothing to do with recent lending.

    To anon 9.17am………..you’d think so wouldn’t you! Put the dollar signs in front of peoples eyes and prudence gurgles noisely down the drain!

    I see a lot of these people drifting by on the way to the impending repo…..you still can’t help but feel sorry for them.

  • Ketan Y 22nd August 2011 at 1:44 pm

    ..lenders survyeyors now have been insisting on the surveyors market rental figure for over 3 years now.
    I dont know of any UK lender willing to use the applicants, estate agents figures?!

    How can this surely still be happenning?

  • phil 22nd August 2011 at 10:24 am

    hmmm, obviously we are not talking about cash-buyers here.. so when was the last time anyone bought under mortgage and the lender did not instruct a joint valuation and rental assessment?

  • Jack 22nd August 2011 at 9:17 am

    Surely the purchaser would do their own checks on rental income and not be carried away with the hype

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