Following the upswing in the capital’s property prices, the number of UK residential properties in negative equity has fallen greatly.
According to HML regional negative equity statistics show that there has been a fall from 826,800 mortgages in negative equity in 2011 to 463,415 in 2013. This evidently shows that UK’s performance has been remarkable and it has managed to turn around its fortuity due to the surge in property prices.
Negative equity occurs when the market value of a house is below the outstanding mortgage secured on it. As house prices fall, the number of households in negative equity tends to rise.
Negative equity can be a painful experience for the households concerned. Borrowers may find it difficult to move home or re-finance.
There is a great scope for the borrowers who find themselves in this situation to let out their homes and rent another. Although renting your home out is not an easy option as it is tightly regulated and there are hundreds of laws to conform to, moving your mortgage to another property may just seem a better option. There are options available from few flexible lenders who would transfer negative equity into a new loan.
The BBC have reported that it may take another five years before properties reach the value they paid for them.
Rebecca Gunn specialises in Employment law, Commercial Property & Residential Property and is a solicitor in our Leicester office.Talk to our legal team
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