Investment property in UK which cannot sell, cannot rent or cannot afford repayments?

H

Hopeful1

Guest
My friend has an investment property in the UK which she cannot sell, cannot rent or cannot afford to make the repayments herself.

She is thinking of posting the keys back to the bank as she can no longer afford the repayment.

Her job is also currently in jeopardy.

If she goes ahead with this will it effect her Irish credit rating as she also has an Irish mortgage??
 
Re: Investment Property in UK

Has she checked if a local authority would rent it? Council tenants may not have the best reputation but at least it would buy her some time
 
Re: Investment Property in UK

Or try a Housing Association who may be interested for up to 3 years
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

What do you mean by cannot sell. What price has she tried to sell at? Could she try as a first step talking to the bank. I'm sure she wouldn't be the first to post the keys back but I imagine if she has property and a job in Ireland they will come after her for the negative equity difference which in all likelyhood will be less if she does the selling herself.
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

It has been on the market for the last 18mths & she had dropped the price considerably, ( below what she paid )her tenant is moving out in 2mths also .Had anyone had any experience in posting keys back, she feels she dosent have any choice now as it will cost her to hold onto it..
 
Investment property in UK which cannot sell, cannot rent or cannot afford repayme

She could put it on the market and take whatever she is offered by a potential buyer who expresses interest. The property market in the UK went static about 18 months ago. In the past 6 months values of residential property in many areas - this varies in degree with location - has fallen 18%. If and when she manages to sell it on she should 'take the hit' and consider herself lucky. Where I live (60 miles north of London) hundreds of properties have been on the market, and unsold, for up to three years despite reductions of one-third of the original asking price. On this account there is now a surfeit of rental properties many of which remain empty, whilst rent has fallen, so not surprisingly in this case the property is empty.

Unfortunately your friend is one of the hundreds of thousands of people whose dreams have facilitated the profits of the hedge-fund managers and corporate bankers.
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

what part of the UK is this property located in as someone might be able to give more direction if more specific.
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

Tell her to consider putting it up for auction. She'll have to be realistic with the price, but it should sell if it's a good property and she's prepared to value it realistically under current market conditions.

Try Allsops or Pugh & Co.

The auctioneers will tell her what it is likely to achieve in any case, if she's looking for too much they just won't list it.
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

The area in walton, liverpool & the apts apparently have really gone downhill in the last few mths, i will inform her re auction, it might be an idea..Yes, at this stage , she will take anything for it..
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

Ouch Walton is a very rough area, it's one of the most deprived in whole of the UK and is home to one of the biggest and most notorious prisons.
This is not a place an overseas buyer should've been buying overseas property, she was obviously very badly advised (even scousers wouldn't by there!), but that is irrelevant now, though it would be the perfect place for rent by the local authority or even the health service as care in the community/halfway house.

The original post asked if this would affect her Irish credit rating, which nobody has seems to have addressed. I presume if she can't afford payment etc then she can't afford to take a hit at auction because she may not cover the mortgage and therefore still have the same worries about an inability to pay back the total and therefore harm her credit rating. It depends how she funded it, if she did so through a re-mortgage off an Irish property then it would affect her rating as it would relate to an Irish bank, however, if she took it from a UK bank then it may not, as far as I am aware there are no cross exchanges of information between UK and Irish financial institutions (but I stand to be corrected). The problem could arise if she got a mortgage from an Irish bank in the UK or a UK bank that has an Irish subsidiary such as Royal Bank of Scotland.

The ability to raise a mortage locally in the UK and hand the keys back if it goes wrong is really on of the benefits of investing in the UK, although I agree it isn't the most positive reason. I think this approach is currently very common, I personally know a couple of people who have recently done this and the possibility of ruining their credit rating never came up.

In the grand scheme of things I'd say a damaged credit rating, no matter how unlikely, is a necessary evil if she wants to get rid of it. But I do think it is unlikely if she funded it through a UK bank.
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

Thanks Linden for all your advice, her mortage is a sterling mortage with Bank of Scotland in Ireland , she didnt remortage her own property here for the apt.Yes, i gather it isnt a great area & has gone downhill in the last few mths, its an old hospital that was converted into apts 6yrs ago & up till this, i think they were ok, well-kept etc...but a disaster recently...i think she feels at this stage she has no alternative to send back keys, she is aware it MAY affect her credit rating but it will affect it if she keeps it also as she is finding it very difficult to keep up repayments..
 
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

Walton is certainly rough. I once got shot at whilst walking down Walton Breck Rd. one evening. It was probably a young kid with an air gun, although I didn't wait around to confirm this. I'm OK so you can have a laugh.

Handing back the keys in the UK does not cancel any liabilities. see http://www.payplan.com/debt-library/mortgages-mortgage-shortfalls.php http://www.a-quick-sale.co.uk/ (these are certainly not recommendations. Just FYI and it'll help tell you the worst case valuation for when considering your other options like renegotiating payments or auctioning off)

I would contact the bank and MABS http://www.mabs.ie/ asap and keep a record of all the options you are trying. The MABS site looks to be full of practical, independent, and sensible advice.

I'm afraid any default will almost certainly adversely affect her credit rating in Ireland as the mortgage has been obtained from an Irish based bank who are members of the Irish Credit Bureau. [broken link removed]

Good luck.
 
Last edited:
Re: Investment property in UK which cannot sell, cannot rent or cannot afford repayme

Linden said:
The ability to raise a mortage locally in the UK and hand the keys back if it goes wrong is really on of the benefits of investing in the UK, although I agree it isn't the most positive reason. I think this approach is currently very common, I personally know a couple of people who have recently done this and the possibility of ruining their credit rating never came up.

In the grand scheme of things I'd say a damaged credit rating, no matter how unlikely, is a necessary evil if she wants to get rid of it. But I do think it is unlikely if she funded it through a UK bank.
Click to expand...

You are making it sound very easy! Yes, the borrower has the ability to hand back the keys but you have forgotten to mention that the banks have the ability pursue the borrower for any losses!

The bank will sell the property (probably at auction) for whatever they can get for it. If the proceeds are not enough to pay off the mortgage they will track down the borrower to get them to pay up. When borrowers have gone missing after handing the keys back, banks have been known to catch up with them even 8 or 10 years later (they even use private investigators). If the borrower then refuses to pay up then they are likely to be taken to Court. Not only are the borrowers responsible for the amount lost at the time of the sale of the property, but they will also have to pay interest for the whole period. This will also apply when the borrower lives in Ireland.
 
You must log in or register to reply here.
Back
Top