Repossession 2019 (for friend) ***Resolved*** then but now back in even worse situation

[tony3x]

Look at other options of raising funds. If he sells the additional property there is the possibility of CGT, same with the art.

 

It may be worth considering a lifetime mortgage on the additional property as the amount required is so small in the grand scheme.

[tony3x]

Is your friend still a UK resident. If so he may be able to get a Lifetime Mortgage to replace the current mortgage and raise enough for the outstanding fees, and also receive an income that could pay the annual service charges. Would have to come back into the UK though.

[tony3x]

Something else that may be an issue here. If friend has a mortgage they will have to have buildings insurance and I am sure that one of the questions relates to the property being empty for extended periods. Has this been addressed, if not and there is a claim there will be a good chance of it being refused.

 

Not sure what you mean with regards a poor sales market, if its regarding property its not that bad and will not grow by any large amounts anytime soon.

[tony3x]

Not sure where the flat is but the property market is not that low. Prices have plateaued in the SE with some decreases for high value properties in London, the rest of the country is generally seeing some small increases.

 

Seems your friend is between a rock and a hard place. He has a flat he cannot afford to maintain costs on but will not sell as he thinks that prices will rise albeit not knowing when.

[tony3x]

It seems to me he is relying on the fact that there is a lot of equity that the lender will not try to repossess, quite a risky thing to do. The service charges would have been in the original lease so must have been agreed at the time it was bought. Not justifying the amount as that seems very high.

 

You mention it was bought decades ago - depending on the length of the remaining lease this could possibly be another issue as the shorter a lease gets the more expensive it is to renew. May be worth checking and hopefully it was on a very long lease originally.

 

Regardless of the rights or wrongs it looks like the problem with the ongoing service charge will always be there and will rear its ugly head every year. As I said a lifetime mortgage that provides a lump sum to clear the outstanding debts and an income to pay the service charge seems like a sensible way out unless your friend has other ways of finding the funds.

 

A lot will also depend on whether your friend intends to come back to the UK, if not I think selling would be a sensible thing to consider as the funds released could be used to generate an income which could be more useful than a property sitting there not producing any sort of return, or actually a loss to be honest. Other option would be to consider letting the property to generate an income to cover the fees and mortgage and probably a bit extra. 

 

I realise that the selling or letting is not ideal but the situation could end up getting out of hand if it carries on. If a lender does repossess it would not be unrealistic for it to be sold at less than 75% of the true value which is not good in any way.