Homes: is this crisis point?

3:27pm Friday 27th July 2007

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Colchester could be about to hit a repossessions crisis, it has been claimed.

Warning bells began to sound as six repossessed flats in a prestigious town centre development were sold at auction for up to £70,000 less than buyers originally paid.

The repossessed flats, in Henry Laver Court, Balkerne Heights, were sold last Thursday by Andrews Robinson Auctioneers, in London.

Ben Dowman, of Andrews Robinson Auctioneers, said: "We have had six flats in Henry Laver Court in July and one in June but it is happening all over the country.

"The number of repossessions has built steadily in the last two years."

James Francis, of William H Brown in Colchester, said one of the flats at Henry Laver Court was originally bought for £250,000 and was sold at this week's auction for £180,000.

In another case, he said an investor bought a two-bedroomed flat in Henry Laver Court to rent out.

However, the rental payment of about £700 a month did not cover the mortgage repayment of more than £1,200 a month and the flat was repossessed.

Homeowners have been hit by the steady rise in interest rates, which has seen some repayments almost double.

Many buyers bought new homes on two-year fixed rate mortgage deals, which have now come to an end.

The shift to variable rates can lead to a sudden leap in repayment amounts. In the buy-to-let market, this can mean a need to increase rates beyond the market norm in order to cover the monthly mortgage.

Mr Francis added a number of flats in other Colchester developments have also been repossessed.

He said: "We are seeing a huge increase in the amount of properties being repossessed and we are encouraging people who have these flats at the moment just to hold on to them or try and rent them out but not to put them on the market at the moment because the value is not what it was."

Toby Spencer-Campbell of Fenn Wright in Colchester, said: "There are lots of flats on the rental market and people are being repossessed."