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IVAs to rise along with house prices 13 August 2013

Rising house prices and easier access to mortgages could see an increase in Individual Voluntary Arrangements (IVAs).

According to new data from the Royal Institution of Chartered Surveyors (RICS) released today (13 August), house prices are rising at their fastest since November 2006, with the largest changes taking place in the West Midlands and the North East.

All regions of the UK have experienced price growth as economic recovery, initially focused in the South East, spread to regions across the country, potentially boosted by the Help to Buy and Funding for Lending government schemes.

Peter Bolton King, RICS global residential director, said: “These results are great news for the property market as it looks like at long last a recovery could be around the corner.

“Growth in buyer numbers and prices have been happening in some parts of the country since the beginning of the year but this is the first time that everywhere has experienced some improvement.”

Mark Sands, head of personal insolvency at RSM Tenon, believes a gradual growth in house prices and mortgage availability, in part as a result of the Help to Buy scheme, “will help boost consumer confidence”.

He explained: “The downturn has been so long and deep (property prices are still 10% below their peak and effective take home pay down 5% in the past few years) that many households in debt lack the confidence to look forward, with many in negative equity or with too little equity to allow them to move house or re-mortgage.”

Figures from RSM Tenon’s early warning “Tracker” system showed that of the approximate 50,000 personal insolvencies filed in the first half of 2013, IVAs accounted for 45%, increasing to 47% for the second quarter – the highest proportion on record.

Sands said: “In the first half of 2013 we have seen IVAs representing a record proportion of personal insolvencies, which is a sign that more people in debt have the confidence in their future to commit to what is usually a five year payment plan.

“These latest property and mortgage trends will help to improve confidence levels and so we expect to see IVAs continue to be the personal insolvency solution of choice for the majority of people, so whilst bankruptcies and Debt Relief Orders (DROs) will continue a gradual decline IVAs will remain at current levels.”

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