Wednesday, 22 September 2010

The Steady Path to Repossession of Our House

Early on with me posting to this blog, way back in 2007, I wrote a lot about the agonies of being booted out of one house by a landlord and then buying another house quickly.  Now, almost three years on, I am in a position to see how much of a mistake that rapid house purchase was.  December 2007 was the worst time to move, with house prices and interest rates seeming to be going to rise inexorably, we felt lucky to get a fixed-rate mortgage at 6% and a 3-bedroomed house at less than £240,000 (€283,800; US$372,400).  Now, of course, with interest rates at almost zero for 18 months, such a high rate of mortgage seems insane, and the house, well, that is worth somewhere around £205-£210,000.  Saying that though, even with a £900 per month (€1,060; US$1,390) mortgage repayment, it was already below the rent for a house of the same size in my town and now, three years later, renting the same type of property locally would cost £1200 per month, so there were savings.  In addition, I was fortunate that after Newham Council had taken its £14,000 cut from the sale of my flat in their borough; HM Revenue and Customs £16,000 for capital gains tax as I had been unable to find work near my flat and so had been compelled to rent it out, and the estate agents sold the 2-bedroomed flat to a friend of theirs at a price you could have got a 1-bedroomed flat in the same area for, I had quite a bit of money to put into the house.  I reckon I will come away with around £30,000 of that, which means I have lost £20,000 (€23,600; US$31,000) in house purchasing since 2001 and am unlikely ever to be able to afford to buy any kind of house or flat again.

The main problem for me at the moment is selling the house before I run out of money to pay the mortgage repayments.  Having applied for 40 jobs in 16 weeks and attended 11 interviews without success, it looks like I am going to be unemployed for a pretty long time; structural unemployment, 1980s-style is back.  I have enough saved from my last redundancy package to pay two more months repayments.  Where money for deposit on a flat and rental payments will come from, I have no idea.  Knowing that I will soon default on the mortgage repayments I have contacted my lender twice in the past four months, first when I was made redundant and again now.  However, both times I have been told they can do nothing, I am not yet desperate enough.  I need to have only one month's repayment money left before they can even begin considering any options such as moving me to an interest-only payment scheme.  I have noticed that at the job centre (even though many of the staff at my local branch are in line for redundancy themselves come December), the building society and the estate agent's, people are still thinking that we are only experiencing frictional unemployment, i.e. people being out of work for three months or less as they move from position to position.  In fact, at a Back-To-Work session run by the job centre they said as much.  People need to wake up to the fact that certainly in public sector work and, I feel, more widely, we are now facing a pretty quick progression to mass, structural unemployment as seen in the 1980s.  The principles of the late 1990s and 2000s do not apply in such circumstances.

I applied for mortgage interest benefit.  I was advised by my job centre that, given that I have been unemployed for more than three months, I should apply for such help.  I did.  I was then told that because the woman in my house works more than 24 hours per week, I was not entitled to it.  To make matters worse I was also told that my jobseeker's allowance, which currently is paid to me on the basis of my contributions, will stop in December because the 'household income' must be too high because the woman in my house works more than 24 hours per week.  Given the current economic climate and the fact that she is self-employed she is working more than 40 hours per week to try to make more money.  She is angry that her business which usually turns a profit of £12,000 per year, i.e. little more than the £8,400 needed to pay just the mortgage (let alone utility bills and food costs) if she was paying it alone, impacts on what I can claim.  To make matters worse, she has been told that whilst she is a single parent, because I am part of the household, even though I have no income apart from my jobseeker's allowance (and even that will stop in less than three months). she is entitled to only £15 ( €17.70; US$23.27) per week in 'in-work' tax credits, i.e. payments for people working but on a low income who have children.  If I leave the house, this would apparently rise to £200 per week.  I have spoken before about the hazards of inadvertently becoming a family if you live with someone of the opposite sex:  Despite that, it is clear that it is much better to be living alone or just with a child if you want to claim benefits.

My efforts then to reduce the steady drain of my savings and the inevitable default on the mortgage has only one possible redemption, one which the building society keeps on talking about, which is to beg from your family.  This assumes that your family is richer than you and willing to bail you out.  I am estranged from my brother who lives abroad and the bulk of the family of the woman who lives in my house live overseas, the rest are in the same situation as her.  I persuaded my parents to pay the mortgage three months from now so the house is not repossessed before it can be sold and they would get that money back immediately from the sale price of the house.  However, they cannot do this indefinitely, and six months seems the maximum.  I am very grateful that I have that, most people would not.  Given how slow the market is, however, it seems very possible that come next summer, especially with more people having to sell up the way we are, the house will remain unsold and the building society will take it over.

Whether I lose the house to repossession or manage to sell it first, the experiment of being a property owner will be at an end and I will be back at the mercies of the unregulated rental sector, which under the current government is likely to be freed even further of its restrictions.  Given how I was kicked out of two houses at the whim of the landlord and had one intimidating myself and the woman and child that lived there, with no notice paid to that behaviour by the police, I have a very bleak view of my future in terms of finding a place to live.  In many ways I have been lucky and I am sure we are all going to hear more stories of people pushed from pillar to post as unemployment rises to new records and landlords/ladies exploit those people who have no choice but to come to them.

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