Repossessed houses

Looking for a repossession property in need of renovation? Maybe you want to flip it for a quick profit or perhaps turn it into a property you can let out, whatever the reason, we can find you a great deal.

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What is a repossessed property?

A repossessed property is a property that has been taken back by a mortgage lender or bank after the borrower fails to make the required mortgage payments or fulfil other financial obligations related to the property. 

Repossessed properties can include various types of property such as residential homes, commercial buildings and land. 

Between 2015 and 2022, almost 28,000 property owners were forced to hand over their properties due to repossession in England and Wales. With County Durham, Bradford, Birmingham and Liverpool having the highest total mortgage repossessions.

How do houses become repossessed?

Property repossessions usually occur when the borrower defaults on their loan payments for an extended period of time, and the mortgage lender initiates legal proceedings to seize the property as collateral to recover the outstanding debt. 

In the United Kingdom, houses can become repossessed through a legal process known as mortgage repossession. 

When a homeowner with a mortgage misses multiple mortgage payments, the mortgage provider (usually a bank or building society) will attempt to contact the borrower to discuss the missed payments and potential solutions. This could include offering a temporary payment arrangement or providing financial advice. 

If the borrower doesn’t respond or is unable to catch up on the missed payments, the lender will consider the mortgage in arrears. Arrears are the accumulated amount of missed payments and associated fees. 

The mortgage lender will then send the borrower a formal Notice of Default, which outlines the outstanding amount, the steps the borrower needs to take to resolve the situation, and the timeframe within which the borrower needs to act. 

If the borrower still doesn’t take action to address the arrears, the lender can apply to the court for a possession order, which is a legal document that gives the mortgage lender the right to possess the property. The court will review the case and consider the borrower’s circumstances before making a decision. 

If the court grants a possession order and the borrower doesn’t leave the property voluntarily, the lender can proceed with eviction.

Bailiffs will physically remove the occupants from the property, however, the court will usually provide a specific timeframe for the eviction, allowing the occupants some time to make alternative arrangements. 

Once the lender has repossessed the property, they will typically try to sell it to recover the outstanding mortgage debt, either through listing the property on the open market, to a cash buyer or selling it at auction. 

The property will usually be sold below market value to facilitate a quicker sale.

How much work do repossessed properties need?

The amount of renovation work needed on repossessed properties can vary significantly, as some homeowners will maintain a property better than others. In most cases, repossessed properties will only need a fresh lick of paint or a little gardening. 

But, if the previous owner neglected maintenance due to financial struggles, the property might require significant work to bring it up to a liveable and safe condition. 

In some cases, repossessed properties can even be subject to vandalism or neglect, leading to damage such as broken windows, stolen appliances, or structural issues like subsidence, mould infestations and Japanese Knotweed. 

You may also need to consider the market demand of an area and if the repossessed property might benefit from cosmetic upgrades to make it more appealing to potential buyers or tenants.

Is a repossessed property profitable?

Buying a repossessed property and flipping it to sell on or turn into a Buy To let, has the potential to be extremely profitable. 

Repossessed properties are often sold at a discount compared to their market value, which can provide a great opportunity for buyers or investors to acquire properties at a lower cost. 

Buying low, injecting small renovation investment to increase the house price and selling at full market value can create encouraging profits. 

But, the amount of work needed to bring the property back to life can significantly impact profitability. While some repossessed property might require only small modifications, others may need extensive repairs that can eat into potential profits. 

You will need to consider what your strategy is before you buy the property.

Are you going to sell the property quickly, rent it out for a steady income or hold onto it for long-term appreciation?

Who are the best tenants for repossessed houses?

If you are renovating a repossessed house, then the best tenants will depend largely on the area surrounding the property. 

The demand for affordable rented accommodation remains at a high, attracting long-term renters, students and young professionals alike. 

Students can be a safe bet for all rented property as they have a set course length, enabling you to have long-term tenants and plan for when their courses end. 

Young professionals can also be an appealing option as they tend to be tamer than students and more financially secure.

Why might a repossessed property be a good investment for you?

As with any property investment, a particular aspect of risk is involved, so it is essential to weigh up the advantages and disadvantages of repossessed properties.

What are the advantages of investing in repossessed property?

Repossessed properties are typically sold below market value which allows investors to acquire properties at a favourable cost, increasing the potential for higher returns on investment.

Over time, the repossessed property can appreciate in value, especially if it is located in an area with strong markets. Buying a repossessed property at a lower price and holding onto it could lead to capital appreciation, enhancing your investment’s value.

Some investors who specialise in flipping repossessed properties. By purchasing properties at a discount, renovating them and then selling them quickly, investors can potentially earn substantial profits.

What are the disadvantages of investing in repossessed property?

Repossessed properties may have hidden problems that are not immediately apparent like structural issues, mould and even unclear title histories.

The inventory of repossessed properties might be limited and finding the right property for you, in the right location can be challenging. Also, as they are sold below market value, they can attract a lot of investors and competition can be quite intense.

As most repossessed properties need to be renovated, there can be a significant renovation budget needed to ensure they are safe to live in.

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What are the different types of repossessed property?

There are two main types of repossessed properties; bank repossession and private property sales.

Bank repossessed houses

A repossessed house that has become bank or government owned are resold quickly in order to recoup any losses. These houses are usually put on auction below market value, or sold on the open market.

Private property sales

Private property sales during a repossession are used as a way of preventing the property being repossessed by the mortgage lender. 

By selling the property privately, the homeowner can potentially pay off the outstanding debt and avoid the negative consequences of repossession of their credit history. Private property sales are usually done completely privately or to a cash home buyer.

How to convert a repossessed property into a profitable Buy-To-Let?

Converting a repossessed property into a profitable buy-to-let investment may involve careful planning, strategic decision-making and effective execution. 

Unsurprisingly, to renovate a profit successfully, you will need to find the best tenants possible for your property. During a renovation, you should ensure that the property can cater correctly to the tenant audience you wish to attract. 

For example, if you are looking to attract young families then you should consider creating spaces for families to gather, like large kitchen islands or dining tables. 

Alternatively, if you are looking to attract young working professionals, you could create quieter spaces with desks so people can work from home. 

Once you have renovated the property, you will need to develop a marketing strategy to attract potential tenants, which highlights the property’s features, location benefits and any unique selling points, like access to GP’s, schools, universities, public transport. 

To find the best tenants for your property, we would recommend conducting tenant screening to select reliable and responsible tenants, and remember to check their references, credit histories, employment history and any previous rental history. 

Having reliable tenants within a property will be largely beneficial to you, as you will experience less voids, on time rental payments and they will look after the property. 

You will also need to create a clear and comprehensive rental agreement that outlines the terms, responsibilities and expectations of both parties.

5 Tips for repossessed property conversions

When converting a repossessed property into a profitable investment, there are 5 things you should consider consistently throughout the build:

1. Plan your renovations wisely

You should prioritise renovations that will maximise the property’s appeal to tenants by focusing on essentials like fixing structural issues, updating plumbing and electrical systems and ensuring that the property is safe to live in. 

But, you should also make sure that you use cost-effective aesthetic upgrades taht can significantly enhance the properties value, like fresh paint, updated fixtures, modern kitchen appliances and bathroom improvements.

2. Budget realistically

You will need to create a detailed budget that covers not only renovation costs but also other expenses like property acquisition, legal fees, property management fees and ongoing maintenance. 

While also accounting for unexpected expenses that might arise during the renovation process via a contingency plan.

3. Choose quality and durability

You should opt for durable materials and fixtures during renovations to reduce the need for frequent repairs and replacements. There’s no point buying the cheapest fridge Amazon, if you’re going to need to replace it 3 times in 5 years. 

While it’s important to control costs, investing in quality renovations can save you money in the long run by minimising maintenance and repair expenses.

4. Conduct through market research

You will need to conduct thorough research to understand the demographics of the area surrounding the property and which potential tenants will be looking to rent. This will allow you to tailor your renovations to meet the preferences of your target audience.

If you are looking to rent to students or young professionals, ensuring you have large kitchens and access to garden space is crucial.

5. Efficient property management

You will need to decide whether you want to manage the property yourself or hire a professional property management company. Effective property management is crucial for maintaining the property’s condition, handling tenant issues, collecting rent and ensuring a positive tenant experience.

How easy is it to find a repossessed property?

Finding a repossessed property and converting into a profitable buy-to-let property, or flipping it and selling it forwards, has never been easier!

At The Property Sourcing Company, we pride ourselves on being able to match you with tailored properties straight to your inbox. 

All you have to do is join our database, which is entirely free, and we will contact you to discuss your requirements. Then if we have an existing property that matches your described criteria, we will send it straight to you.

If you don’t match immediately, don’t worry! With hundreds of properties being added to our database annually, opportunities are just around the corner!

Our service doesn’t just stop there; once you have matched with the property, we will help you negotiate any deals and help you at every step.

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What property renovation alternatives are there?

Repossessed property

A repossessed property is a property that has been taken back by a mortgage lender or bank after the borrower fails to make the required mortgage payments.

Renovating a structurally damaged property is a complex undertaking that requires expertise, patience, and a commitment to quality workmanship.

Fire can cause structural damage and leave behind smoke residue, while water damage can lead to mould growth and further deterioration. But, when renovated can provide high capital appreciation.

Inherited property

Inherited properties are often in good condition, however they may have been neglected as the deceased owner became older, so renovation will need to be carried out. 

Why invest with us?

We’ll find you the best deal, with the highest yield possible, tailored to your requirements. 

We have years of experience in this industry and are part of a group of companies that regularly purchase properties for below market value, in which we can pass the discount on to yourself. We’ll look at every property we purchase, or even get an enquiry for, to determine if it will offer a high yield. If the answer is yes, we can pass the opportunity on to our investors.

We make it easy, doing all the research for you & finding the perfect property to slot into your portfolio. 

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Our locations

You might be wondering where we are able to offer these fantastic Buy To Let opportunities with great yields, and the answer is pretty much anywhere in England and Wales. We’ve detailed below some of the main areas that we regularly buy properties in, just to give you an idea.

Buy To Let investment examples

When we say that we can source properties that offer a high yield, you don’t just have to take our word for it. Below you will find some of the properties we’ve recently sold to our investor database and their example yields:

Gwent Buy To Let
Leeds Buy To Let
Crewe BTL
North London Buy To Let