Housing market / mortgage lender malarky

tek-monkey

tek-monkey

wanna see my snake?
I'm sure I don't need to go into detail about the huge financial issues going on at the moment, but I do have a serious question. Firstly, in a vastly simplified overview, the problem:

Banks lend money to people who can't afford it
People stop paying banks
Banks have no money, so if savers withdraw they cannot pay
Savers find out, panic and withdraw
Bank folds

Sound about right? Now my question, and it may be a very silly one but I can't think of an answer, is this. Why not just reposess and rent the house out, rather than selling at a loss? People need to live somewhere, those defaulting on bigger properties can downshift and rent tthe one that just got reposessed. Houses don't exactly stand empty that long, mass selling of properties drives values down so more is lost on each house, it just makes no sense.

Or have I really missed something here?
 
shoes

shoes

Well-Known Forumite
I don't know if you have missed anything. Your solution seems to make perfect sense in as much as preventing homelessness as well as allowing people to continue where they're living. Again it would reduce the mass selling of houses, however it would make an already slow moving market almost static. On the plus side it can only put even more estate agents out of business ;)
 
tek-monkey

tek-monkey

wanna see my snake?
All I can think of is that they don't want the hassle of upkeep? Plus of course they sell at a loss, but pass the loss to the customer, so don't really lose as long as the customer is able to pay back that (smaller) debt.
 
shoes

shoes

Well-Known Forumite
Opening up a departmend for estate management would create jobs and long term profit for the bank, surely there are other factors which make this not an option. Otherwise its a no brainer!
 
Wookie

Wookie

Official Forum Linker
tek-monkey said:
Why not just reposess and rent the house out, rather than selling at a loss?
Click to expand...
I've always presumed it's because renting out houses means continuous admin; collecting rents, chasing late payers, fixing things wrong with the houses and so on and so forth. Compare to selling, where you do a mountain of paperwork once and then never have to think about it again.
I'm willing to be corrected, though, if anyone *knows*...
 
S

Silverfish

Well-Known Forumite
Also, mortgage repayments are higher than rents, so the more a bank does this, the lower its projected income.
 
shoes

shoes

Well-Known Forumite
I bet if they rented the house out to individual persons they would get much more. Last year I lived in a house which I estimate would be around £550 - 600 to mortgage. The rent was £800 (4 x £200). Thats the way to do it. Outsource the management or create an in house department and create jobs. Better than throwing people out on the street and selling at a loss, surely? You could get even more in the current climate, its a landlord's haven at the moment. Especially furnished.
 
E

expert

expertrequired.com
Drinking Heavily Would Help Credit Crunch

If you had purchased £1,000 of Northern Rock shares one year ago, it would now be worth £4.95.

If you’d bought £1,000 worth of shares in HBOS, at the end of Sep your investment would have been worth £16.50.

If you’d plumped for £1,000 invested in XL Leisure, your shares would now be worthless.

But if you bought £1,000 worth of Stella Artois one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant, you would get £214.

So clearly, the canniest investment advice is to drink heavily and re-cycle.
 
tek-monkey

tek-monkey

wanna see my snake?
Much as I'd like to believe those stats, they imply you'd get 9p a can for recycling them? If only!
 
E

expert

expertrequired.com
A bulk purchase of £1000 would give you a big discount and therefore more cans for your money!!!
 
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