The perils of buying repossessed property – part 2

So here’s part 2 on why buying repossessed, bmv property is not for the faint hearted, or for those with high blood pressure.  Here we continue to expound on the cans of worms you may open up when you choose to buy a repossessed property, a process that even James Bond would be hard pressed to keep calm over.

Here are some more useful tips:

Tip: Speed is of the essence. Emphasise to the seller (if true) that you are a cash buyer and will pull out the stops to complete quickly. Make sure you use a solicitor who will proactively push things forward as quickly as possible.


The fact is people are not going to be happy about being kicked out of their home. It’s common for people to blame someone else for their troubles and likely that people being repossessed will become vindictive. They not only frequently leave the place in a dreadful mess, but will often actively vandalise the property and steal anything they can. Examples we have experienced include taking all bathroom fittings, removing boilers, copper piping, cutting and sabotaging the copper wiring (labour costs to replace £1200!), sabotaging the water tank – which meant the newly re-plastered walls despite using all manner of industrial heaters and dehumidifiers took over 2 months to dry, massively delaying what should have been a 4 week refurb.

Tip: Do not expect a survey to reveal all the potential damage. Build in a generous contingency fund to your budget.


Chances are the gas and electric bills will not have been paid and the supply will have been cut off. It may even have been de-energised from the main street power source. The seller will have no information about who the suppliers are and you will need to set aside a good few hours to indulge in Kafka-esque dealings with utility companies to find out who supplies it and how you are going to get it reconnected. Not anyone’s idea of fun.

Tip: You have two choices to deal with this and retain your sanity. 1. Outsource it to a person who you don’t know (as they will probably never speak to you again after 6 excruciating hours of banging their head against a wall) or 2. Order a large supply of Valium and try not to smash your phone into tiny pieces – not that I have ever done that of course. Maybe once… Or twice. Definitely no more than thrice.

Block Management Issues

There are apartment blocks up and down the country that have been sold to investors at the height of the market.  Many investors’ motivation, I suspect –given the ridiculous prices recorded at the Land Registry, was some sort of dodgy cash back incentive rather than a long term rental income. These investors showed no commitment to paying their mortgages and as they bought whole blocks of flats with 100% finance to maximise the cash they could immediately get their mitts on, when they defaulted on their mortgages, whole blocks have been repossessed. They also in may cases have avoided paying their service charges which means the block management companies (which subsequently gone bust) stop maintaining the communal areas and they are often in a state of disrepair.

No mortgage company will finance the purchase of a flat where there is no block management contract in place. It can therefore represent a great opportunity for an investor who can buy for cash and wait for all the flats to be resold so that a new management company can be appointed to sort out the mess.  But it can be a complex situation to establish whether the purchaser will be responsible for unpaid service charges and it can even be an issue as to working out who has the right to receive that service charge. It is definitely not for the faint-hearted.

Tip: It is essential to ensure you have a very good and experienced lawyer. It may well be the difference between getting the deal done or not and also ensuring you are not held liable for thousands of pounds worth of accumulated charges.

Solicitor’s Not Completing –

In 18 years of property investing, I had never heard of this happening – until it happened to us. Essentially, our solicitor left a junior in charge of the completion whilst he was on holiday. He informed us that we had completed on the property – a fantastic bargain where we acquired a 5 bed house in Bolton and a 2 bed flat on the same title for £50,000. Open market value was well over £100,000. We collected the keys and sent the builders in. Two weeks later, after racking up over £20,000 of building costs, I received a call from the solicitor telling us there was a problem and they hadn’t actually completed on the property (despite having transferred the money to the seller) and the seller now wanted to sell to someone else. I can feel my blood beginning to boil just thinking about this again, so I won’t go in to any more details. Suffice to say after protracted negotiations to try and rectify the situation, we had to concede and are now suing our (ex) lawyers for the losses incurred.

This last problem is highly unlikely to ever happen to you, but the point is totally unpredictable things can and will happen at some stage.

Tip: “hope for the best prepare for the worst” (thanks, Grandma).

So, in conclusion, the truth about buying repossessions is things are never as easy as the gurus make out in their seminars – if they were everybody would be doing them. When investing in repossessions, the maxim “caveat emptor” (I knew 3 years of Latin would come in useful one day) should always be borne in mind – buyer beware.