Scottish House Prices Likely To Fall
14th August 2012
A UK survey of chartered surveyors shows that the majority expect property prices to fall in the coming months. 23% more surveyors though prices would fall, compared to those that believe they will increase. In Scotland the majority was greater, with 27% more believing prices are likely to fall.
Of course, for most people declining home values are very unwelcome. However, any homeowner that is seriously struggling with debts may actually benefit from property price falls. In many circumstances equity in property can be an obstacle to using debt solutions such as a Scottish trust deed or sequestration (bankruptcy) to tackle a debt problem.
Scottish trust deeds and sequestration are both forms of insolvency. Insolvency procedures will take into account any owned assets, which can include equity in a home. The value of such assets will typically have to be realised to help repay the creditors. As a last resort, a home may have to be sold to realise that equity if it cannot be achieved by other means.
Falling property prices, should they occur, will mean that fewer people will have equity in their homes. Without equity, a Scottish trust deed or sequestration may be viable options without placing a home in jeopardy. For obvious reasons, homeowners should still proceed with caution though.
Many people that have equity in their homes choose to use the Debt Arrangement Scheme (DAS) rather than insolvency options like Scottish trust deeds. DAS does not impose the same requirement to release the value tied-up in assets.
Falling house prices in Scotland may also benefit homeowners that are already using trust deed Scotland procedures. Those that have committed to releasing equity from their homes may find that their negotiating power increases as their property value declines. The reason for this is that a forced sale (the last resort sanction available to a trustee) is less likely to produce a worthwhile sum for creditors.
Trust deed firms may therefore be more open-minded about realistic compromise proposals where a client needs to deal with equity in a declining property market.
Instinctively any homeowner wants to hear news of surging property prices. Owning a home that is increasing in value often gives people a sense of security and prosperity.
Falling house prices may however open the door for heavily indebted homeowners to access insolvency procedures that previously would have involved too much jeopardy for their home. Homeowners in Scottish trust deeds already may find that this scenario provides a more ready exit from the procedure than previously existed due to their improved negotiating position.
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