The UK Insolvency Helpline News

Cry for Help From Buy to Let Investors

LONDON, July 3 PRNewswire — The UK Insolvency Helpline ( http://www.insolvencyhelpline.co.uk/ ) said that the credit crunch was leaving many buy-to-let professionals unable to cope with their mounting debts. The helpline reports that there has been a 100 per cent rise in the number of enquiries in the first 6 months of the year compared to last year. This equates to over 14,574 enquires compared to 7471 in the same period last year.

It is not hard to see why investors were so keen on the buy-to-let market. In the 10 years since buy to let has become fashionable, investing in residential property has been a sure fire way to earn an income and capital.

Thousands of calls to the helpline have come from people in debt that have bought newly built urban apartments in the North of England, where prices have been plummeting by up to 70 per cent. In particular, buy-to-let investors have been attracted to new-build blocks eager to get rich quick from the property boom. The problem now is that many fear they paid vastly over the odds and cannot rent them. Flats in certain developments in areas such as Manchester, Newcastle and East London have also fallen in value by 40-50 per cent.

The problem is identified most to those that caught on "late in the day". These amateur investors are now being exposed to a housing crash mainly fuelled by a drop in mortgage products on offer.

With rental yields hitting a five-year low and interest rates expected, the wannabe property tycoon is experiencing a painful squeeze, especially if they have been tempted into the market by a heavily discounted mortgage that's reverting to a variable rate.

Richard Sorsky, the money advice co-coordinator of The UK Insolvency Helpline, said, "In the past it was almost all amateur people in employment looking to become property investors, however, since the credit crunch started we are seeing a big increase in professionals property businesses and house builders companies coming to seek help. They have just been pushed over the edge and now can't cope with their outgoings."

Many of the people seeking help from The UK Insolvency Helpline had used equity in their homes to pay for deposits on buy to let mortgages. In some cases people are running up huge credit card debts to cover the loss on the rental incomes from the properties. As fixed-rate mortgage terms came to an end and the cost of living increased, many people are finding it hard to meet repayments, even if they earned a relatively good salary from their jobs. Many of the clients struggling to meet their debts are opting for an Individual Voluntary Arrangement (IVA) (http://www.insolvencyhelpline.co.uk/paye-employed/the-iva-procedure.php ) to avoid bankruptcy.

IVA as a solution to clear debt ( http://www.insolvencyhelpline.co.uk/paye-employed/the-iva-procedure.php )

The IVA is a common legal route for anyone to take who has an unsecured debt over GBP 15,000 that they cannot afford to pay. Introduced in the mid 1980s, IVAs have become very popular among those with high levels of unsecured debt. An IVA stands for Individual Voluntary Arrangement, and this is a binding contract made between the borrower and his or her creditors with regards to repayment of a debt.

Notes for editors:

1. The UK Insolvency Helpline receives over 500,000 calls and emails a year via it freephone number +44(0)800-074-6918 and website http://www.insolvencyhelpline.co.uk

2. The UK Insolvency Helpline is a national telephone helpline for people with debt problems in England, Scotland and Wales. The service is free, confidential and independent. The service has existed since 1986and was set up in conjunction with the credit and insolvency industry. The free service provides self-help advice to its callers and also produces written self-help packs and factsheets to back this up. The service can also assist callers with the setting up of IVA, bankruptcy and debt Management plans.

For further information: Ian Boden-Smyth, +44(0)845-612-2626. Boden Smyth PR for the Charities and Non Profit Social Enterprises Sector

SOURCE The UK Insolvency Helpline

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