Scottish property market slumps – trust deed news

13th May 2011

Official data from the Registrars of Scotland has highlighted a further fall in the price of Scottish properties, with the number of homes being sold in decline. But just why does this discrepancy with the rest of the UK exist? Trust deed news investigates.

The first quarter of 2011 showed a 7% decline in house sale prices compared to the end of 2010. The number of homes sold in Scotland fell by 35%.

These figures are in contrast to the UK property market as a whole. The Nationwide Building Society reports a small drop in sale values in April. Over the past six months they have been broadly level, increasing three times and decreasing three times. Overall the UK property market appears to be fairly stable. Prices are down just 1.3% compared to April 2010. The number of approved mortgages is at its highest for eight months.

It’s difficult to understand the reasons for the discrepancy between the Scottish housing market and that in the remainder of the UK. However, the implications for homeowners already in a trust deed or considering starting a protected trust deed are clear.

When signing a Scottish trust deed an individual commits to pay over their surplus income and the value of their most significant assets. In return for meeting these commitments any debt not repaid will be written off.

For most individuals their home represents their most significant asset. Up until a few years ago homeowners with equity would simply seek to remortgage at the end of their trust deed in order to pay over the amount due for their equity. This type of mortgage is now almost entirely unavailable.

Without this remortgaging option the risk exists for homeowners that signing a trust deed could eventually result in the loss of their home if they cannot obtain the funds in another way. Effectively a protected trust deed has therefore become a non-option for many homeowners with plenty of equity.

However, the steep decline in real house sale prices in Scotland may be of benefit to those in serious debt who otherwise may have had to enter into long repayment arrangements via the debt arrangement scheme or a debt management plan.

Lots of us overestimate the value of our homes. Debt advisers often speak to enquirers who say, for example, that their home is worth £120,000, even though there is an identical home on the same street which has remained unsold for a year at that price. In real terms, the house is not worth £120,000 if nobody is willing to pay that price.

Those individuals currently considering a trust deed who are worried about losing the equity in their home would be well-advised to seek a realistic valuation before making any important decisions. Asking for an estate agent for a valuation on your home, at a price they would be able to sell the property quickly, is a simple way to help make a judgement.

For further trust deed information make use of our trust deed forum. We have a wealth of information which tells you everything you could possibly need, from the point of view of members of the public and trust deed experts alike.

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