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Mortgage trap that looms for right-to-buy homeowners

Saturday, July 25th, 2009

Survey reveals level of risk facing ex-tenants who purchase their council property. Jamie Elliott reports

People who buy their council property under right-to-buy schemes are far more likely than other homeowners to get into mortgage arrears and risk losing their homes.

A survey of almost 2,000 mortgage holders carried out by the campaign group Consumer Focus between March and May found that right-to-buy homeowners were twice as likely as other households to have had problems paying their mortgage. Nearly one in 10 who had bought their council home got into difficulty in the previous three months.

People who had taken out a mortgage on their council home were also 50% more likely to have other debts secured against it, leaving their property at greater risk of being repossessed.

The findings, given exclusively to The Observer, come as no surprise to Val Blood, of North Yorkshire Housing Advice Resource Project, and duty housing adviser at York county court.

"During the property boom, council tenants were encouraged to take out mortgages they simply couldn't afford," she says. "Companies leafleted whole estates and especially targeted tenants in rent arrears with the promise of paying off what they owed and allowing them to buy their home as well. But if you can't pay your rent, how can you pay a mortgage? Within a year many were facing repossession and often ended up homeless."

Council tenants who bought their homes have also been targeted by companies selling second mortgages.

"Because of the discounts councils offer, these people have equity in their homes as soon as they buy them," says Brian Coulson, housing lawyer at Bury Law Centre. "There has been a lot of hard sell on TV and cold-calling from lenders encouraging right-to-buy homeowners to 'release the equity in your home'. When you're struggling to make ends meet, these offers are hard to resist."

Investing for the future
Glen Mason, 54, felt he was investing in his future when he bought his Cheltenham council flat for £34,000 in 2006. "I thought buying the flat would make my retirement easier," he says.

However, store card and credit card debts soon started to build up, making it difficult for Mason to keep up his mortgage repayments. Barclaycard and some of his other lenders successfully applied for charging orders, securing the money they were owed against Mason's home. Then the recession cost him his agency cleaning job. "I started claiming jobseeker's allowance in January but couldn't get any help from the government with the mortgage repayments until April. By then it was too late."

Homeowners who claim jobseeker's allowance or income support have to wait 13 weeks before they are entitled to help with mortgage interest payments.

Last month a judge granted Mason's mortgage company a possession order, and gave him 28 days to vacate his home.

"I'm still in the flat but am worried the bailiffs will come and change the locks at any minute," says Mason. "What makes me angry is knowing that if I had still been renting from the council, housing benefit would have covered my rent when I lost my job and I would still have a home."

Sale and rent back
Some right-to-buy owners who land in difficulty are tempted by "sale and rent back" schemes, where they sell their property at a discount to a private company with the promise of remaining in it as a tenant. But Denise Rooney of Chas Housing Aid Centre, Kirklees, says many schemes fail to deliver: "We have cases where people are allowed to remain in the home for a much shorter time than they were led to believe or the company they sold their home to goes bust, the debt is sold on and they are evicted."

Right to buy homeowners whose properties are repossessed, including families with children, are not eligible to be rehoused because they are deemed "intentionally homeless". According to the housing charity Shelter, more than 600 households were classified as intentionally homeless due to mortgage arrears in 2008.

"The vast majority were people who had bought their homes under right-to-buy," says Shelter's Bill Rashleigh. "Many got mortgages from sub-prime lenders, which makes them ineligible for help under the government's homeowner mortgage support scheme and often they don't fit the narrow criteria for the mortgage rescue scheme either. So when the worst happens and they are evicted, they find there is no safety net."

A Consumer Focus spokesman says: "The government must ensure people go into right-to-buy with their eyes fully open and provide the level of help and support needed if they get into difficulties. Lenders should also be obliged to lend in a responsible way that takes account of their needs."

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Fancy the barge life? Don’t go off the deep end

Saturday, July 25th, 2009

Property prices may well be falling, but that hasn't stopped several throwaway suggestions that living on a barge may be cheaper than paying city rents.

However, buying a narrrowboat isn't necessarily the brightest of ideas if you've never lived on water before.

"So many people talk glibly about getting on the property ladder by buying a boat, but a boat is not a property," says Rex Walden, chairman of the Residential Boat Owners Association. "If you are considering it because you love waterways and wildlife, then fine - but it worries me that recently a lot of people have shown an interest for all the wrong reasons."

Walden says he has heard of land-living renters ordering narrowboats to move into permanently - only to confess that they have never stepped on board this sort of boat before. He adds: "If you are serious, then try it out. Book a narrowboat holiday, ideally in the winter when it's freezing cold and raining, to see what it really would be like."

A holiday is all it took for Walden and his wife to be converted; many of their friends have since followed suit. They have been living on a narrowboat, moored usually around Staffordshire, for the last six years.

"It may sound like a cliche, but there is something charming about how time slows down. There's the changing scenery, and the novelty of fauna and flora you may not normally see," says Walden.

There are plenty of websites that offer canal barge holidays - try Narrow-Boat-Hire.net, Black-Prince.com, and Waterways Holidays.com.

But don't presume that a water-based break will be cheaper than a spell in a hotel or B&B, as there is an inevitable premium for the novelty factor of lodging in a boat.

The cheapest last-minute holiday Cash found on UK Boat Hire.com was for £647 for four people for a week, in the beginning of August, in Gailey, Staffordshire; the most costly was £1,027 for six people for a week along the waterways in Falkirk, in the Scottish Lowland canals. "Narrowboats are not cheap, and maintenance is high, so companies that hire them out have to allow for that," says Walden.

He says that complete barge novices should be given elementary training about locks, steering and safety checks.

Most companies should run through this on the day you arrive to board - some send out training DVDs as well.

If you get hooked, and are seriously considering living on water, then try it out long-term before committing to buy.

GreatEscapeNarrowboats.co.uk lets you rent for a minimum of six months to see if it really is for you, with the option of buying at the end of your contract. Rentals start from £600 per month, although you will also have to pay for a waterways licence (£50 a month for six months) and fuel and heating costs, which are estimated at around £25 a month.

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Why buying the boat of your dreams is not all plain sailing

Saturday, July 25th, 2009

Mooring fees, maintenance, insurance: extras abound. Harriet Meyer steers you in the right direction

A spot of snorkelling in a secluded cove with no tour guide to hurry you along, cruising the coast to look for dolphins when the fancy takes you or simply bouncing along the waves at high speed - yes, owning a boat can bring many pleasures.

But they come at a price. If you're considering buying a craft, whether a one-man canoe or luxury cruiser, it's vital to consider all the costs. Depending on the scale of your ambition, it can set you back as much as a car or a house.

Aside from the boat itself, there are running expenses such as mooring fees, winter storage, maintenance and insurance - and you must account for the accidents that can happen at sea.

"As a rule of thumb, running costs are about 10% of the purchase price for mid-range boats of around 36ft long," says Stuart Carruthers, cruising manager of the Royal Yachting Association.

"Some, such as motor boats, will cost much more as the price of fuel has risen significantly since November."

Where to buy
If you are keen to start researching a potential purchase, Boatshed.com and ybw.com (Yachting & Boating World) detail secondhand boats for sale. You could use them as a starting point to check whether the price demanded by another seller, say, resembles that of similar models on the site.

Another option is online auction site eBay, which tends to have small boats at competitive prices.

Check the state of the boat before payment. For yachts, you should enlist a marine surveyor to report on its condition. "Don't pay anything to anybody until this is done, even a deposit - and make sure to get a competent surveyor who has indemnity insurance so that if they tell you a pack of lies you've got somebody to sue," says Carruthers.

"Also check they are a member of a recognised organisation such as the International Institute of Marine Surveying (IIMS) or the Yacht Brokers, Designers and Surveyors Association (YBDSA)."

For smaller boats - dinghies - just research whether you're paying the right price given the condition.

Keeping things covered
Before taking to the waves, check safety equipment. And in case you do get into trouble on the water, make sure your marine insurance is sufficient to cover damage to the boat and any other costs arising from an accident.

You should also check on the amount you can claim, should your boat end up in a watery grave.

Boat insurance is not compulsory, but most marinas and harbour authorities insist on third-party insurance, as does British Waterways, which controls most of the rivers and lakes in the UK.

This form of insurance predates all other types of cover, and policies vary in detail and price, which can make comparison tricky. Also, prices will vary widely depending on whether you intend to race or simply cruise along.

It pays to do research and decide on your priorities. Boat owner Damian King, 30, realised the value of his insurance cover when his boat was taken for a joyride by some drunken revellers off Brighton beach this month.

"My laser dinghy was left washing up all night," he says, "with bits strewn across the beach and out to sea - it took a bit of a pounding and I lost quite a few items that were stored in the boat."

However, the science teacher is content with his insurer Noble Marine, which provides "new for old" cover. "I always thought I'd need to replace something on the boat, from damaging it through racing, but I never thought that it would be as a result of an incident like this."

He is claiming on his policy for repair of the boat and the lost items, including spars and sheets. The comprehensive cover costs £130 a year.

Finding insurance
If you want to find out if you are paying the going rate for insurance, you might want to check the websites that give you an instant quote. Craftinsure.com and Covermyboat.co.uk are two such sites.

GJW is the UK's largest direct boat insurer and publishes the full policy document on its website, so you can see exactly what you're covered for, as does Noble Marine.

Always check what is included because, for example, medical expenses are not a feature of every policy.

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Let’s move to … Eastbourne

Friday, July 24th, 2009

The East Sussex town has cracking caffs and ice-cream parlours, says Tom Dyckhoff

What's going for it? Magnificent municipal borders. Oh, and a pier out of your dreams. Old people – loads and loads and loads of them, and that can only be a thoroughly good thing. Lots of Festival of Britain-era caffs (loving the Lilac Fish Restaurant). And what a bandstand! Right out on the prom with a sea-blue terracotta tiled roof. The Towner Art Gallery opened recently in a new, sharp-suited building jam-packed with a splendid collection. The town already has its own Cultural Quarter and attendant magazine, thanks very much, like any self-respecting regenerating seaside, and, indeed, a smattering of downshifted creative types.

The case against The usual seaside melancholy. The main shopping area's been mucked about with over the years with cheapskate malls and rank public art.

Well connected? Road-wise you're at the mercy of the A27. Rail better: trains two or three times an hour to the mainline at Haywards Heath (45 mins); two or three an hour to London Victoria or London Bridge (about 90 mins); an hour to Gatwick; 35-45 mins to Brighton.

Schools Primaries: West Rise and St John's Meads CofE both "good", says Ofsted, St Thomas a Becket Catholic "good" with "outstanding features", and Ocklynge "outstanding". Secondaries: Ratton, Eastbourne Tech and Cavendish all "good"; The Bishop Bell CofE and Willingdon Community "good" with "outstanding features".

Hang out at Not one, but three cracking Italian ice-cream parlours. Notarianni's, Macaris and the gorgeously OTT Favoloso.

Where to buy West, like the Meads area, where you'll find 10-bedroom Victorian villas and modern exec homes. Ditto north in Willingdon, especially around Ratton village. Closer in, south and west of the train station, is poshest. Villagey spots like Little Chelsea, Upperton, Old Town and Little Ratton for more affordable Victorian terraces and semis. Perfectly pleasant suburbs in St Anthony's and Hampden Park. Cheaper terraces east in the Redoubt area.

Market values Vast piles, £600,000-£1.2m. Four- or five-bedroom detacheds, big period semis and seasidey town houses, £350,000-£600,000. Smaller detacheds and period semis, £180,000-£350,000. Terraces, £140,000-£320,000. Flats, all prices from £80,000-£800,000.

Bargain of the week Two-bedroom end-of-terrace house in the town centre, needs modernisation, £129,995, with MasonBryant (01323 646564).

From the streets of Eastbourne

Noelle Cullimore "Good things: the Dickens tea cottage on South Street, for tea and cakes. The nightlife's ideal if you are 16 or over 65."

Alan Howlett "Best place to eat: the Lamb Inn, an 11th-century pub. Best-kept secrets: the Underground Theatre and the award-winning butcher in Albert Parade."

Ed and Jane Vincent "It's friendly, peaceful and quiet. Negative – tThe shopping precinct's abysmal."

• Do you live in West Kirby? Do you have a favourite haunt or a pet hate? If so, please write, by next Friday, to lets.move@guardian.co.uk

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End of the dream for British expats in Spain

Friday, July 24th, 2009

Hundreds of thousands of Brits have headed to the sun seeking a Spanish idyll. But the economic crash has left many facing disaster

The British butcher has gone and the karaoke nights at Jack's and the Big Ben bar are all but dead. You can still get all-day British breakfasts and John Smiths on tap in San Fulgencio but a row of dusty, unkempt shop windows is all that remains of the internet cafe, the installer of pirated British TV channels and the Property Choice estate agent.

"It's like a ghost town," says Dennis Conway, 76, who is thinking of joining the exodus of Britons from this once bustling estate of bungalows and modest two-storey houses a few miles from Spain's eastern Mediterranean coast. "It's devastating. My pension is slowly disintegrating and there is nothing we can do about it. It is bloody frightening to think what might still happen."

Dennis has been here for 15 years. He has seen the La Marina estate in San Fulgencio go from a sleepy outpost of retired Brits to a boomtown of holidaymakers, second home-owners and young families trying to make a go of it in Spain, to the current bust. "I've never seen it this bad. I'm thinking of going back."

Britain's fevered obsession with the Spanish good life is over. Once, ex-pat bars up and down the Mediterranean coast heaved with happy talk about cheap beer, low council taxes and why it was so much better to be in Spain. Now the drinkers are more likely to curse the pitiful pound, discuss who missed the last outing of the British pensioners' club, and swap stories of friends who are moving home. There are whispered tales, too, of repossessions and of people packing up, dropping their keys at the bank and trusting easyJet to save them from Spanish creditors.

San Fulgencio is not alone. The removal trucks are busy in all the "urbanizaciones", the vast housing estates that Brits now call "urbanisations". They are places like La Marina, Ciudad Quesada, La Siesta, El Raso and all the others that line the dual carriageway inland from the beach town of Torrevieja, 35 miles south of Alicante. The trucks are also grinding their way up the narrow, twisting roads to the small hillside villages colonised by the last wave of Britons to catch Spain fever and come looking for sunshine, property and independence.

Removals companies confirm the tide has turned. "I'd say 70% of our work is now taking people back," says one of the many cash-in-hand British "white van men" working without licences outside the Spanish tax regime. He did not want to be named. "We've had retired people calling us and saying they are going to Bulgaria or places like that," explains Angie Russell, whose Union Jack company near Benidorm has been moving Brits – legally – for 22 years.

Television shows such as Channel 4's A Place in the Sun promised adventure, swimming pools and the good life. A collapsing pound and the credit crunch have brought a harsher reality: homesickness, financial hardship and something those who call themselves "expats" rarely take into account, that they are immigrants – often with all the problems of not understanding the language or the rules. Interestingly, a surprising number of them list immigration as one of the things they dislike about Britain. Few, indeed, come from Britain's own ethnic minorities.

For some, Spain has become a nightmare. Judy and Bill are going back to the West Country this month. Both served in the armed forces, then ran a fish-and-chip shop before coming to a rented villa with a swimming pool and views of the beautiful Jalón Valley in northern Alicante. That was two years ago. Frustration, boredom and their own naked prejudice are driving them home. Encounters with Spanish housing developers and their British estate agents – who scare them so much they do not want their real names used – have left them bitter. "This is a country with no law," proclaims Judy. "We in England abide by the rules but here they don't bother. Even the Brits here rip you off. I think most people would go back if they could. It'll be a relief to get home. It's not as cheap as people think."

"We're unsettled," admits Barbara Moseley, who is selling her house in San Fulgencio and moving to Lancashire. "I miss the grandchildren. I'm on the phone every day to them. I'll miss the easy pace of life here but the family comes before that." Her ex-policeman husband Terry does not want to go, but admits the winters now feel chillier and their unsteady pensions dwindled by up to 30% as the pound lost value dramatically last year. The rollercoaster exchange rates saw them losing €500 a month at one stage. The Moseleys will have to wait to go home. The market is flooded with unsold homes. "We've only had two people come to view it in 12 months."

A million Britons live for all or most of the year in Spain, according to the British embassy, although only 375,000 have registered formally at local town halls. Many would rather the Spanish authorities, especially those who collect taxes, did not know they were there. The one million figure makes them Spain's biggest immigrant group.

Brits in Spain are usually associated with the southern Costa del Sol, near Malaga. It has glitzy, corrupt Marbella and once boasted Sean Connery, Barbara Windsor and glamorous East End gangsters among its denizens. Even Princess Diana visited. The biggest population of Britons, however, lives in Alicante province, along the long stretch of coast from Denia to Torrevieja. There is little glamour – and no princesses – here. Incomes are low, and the black market, English-speaking economy has attracted a legion of ill-prepared chancers trying to live off their – sometimes invented – skills as plumbers, electricians, hairdressers, gardeners, pool cleaners or labourers. "It's the younger people who are moving back to Britain," says Barbara Chadwick, at the Home 2 Home removals firm near Javea. "They just can't make it here."

But even the true Spanish devotees are finding the going tough. Phyllis and Ron Hillman, both in their late sixties, have found two state pensions no longer fund the good life they once had in San Fulgencio."It sounds shocking, but we never had to budget before," says Phyllis. "We are down €300 a month. What do you do? You cancel your gym membership and you don't go out nearly as much. And we couldn't afford the British butcher any more."

Penny Lapenna is another of the genuine Spain-lovers. She and husband Joe sold their house in London's East End nine years ago, and bought a house outright in the charming inland village of Parcent. They learned Spanish, got jobs, put their three daughters into the local school and enjoyed life. "We swapped our grey clothes for bright clothes," says Linda. "I have loved living in Spain."

Then her husband's computer business folded and Linda lost her job on an English- language newspaper. Now she is applying for jobs in the UK. Her sister and at least three other British families from the village have already gone. "We've seen many families come and go in nine years. They fall into two groups: one lot with crazy notions and no command of the language who ended up having an extended holiday; and the other lot who made quite a go of it and set up businesses. But, like any immigrant, if your business struggles you have no fall-back."

A Spanish bank manager in San Fulgencio confirms that people are dropping off their keys. "They are wrong to do that," she says. "That does not cancel a mortgage in Spain." Already banks are hiring lawyers in Britain to track debtors down. "I'm getting calls from people who are having houses repossessed almost twice a week," says Michael Wroot, at the second-hand furniture store he has run in Javea for 26 years. "It's probably the worst it has ever been."

While the young move home, the old have few options. "Some people are having real problems paying the bills," explains the owner of a private old people's home for expats in Alicante. Even the dead try to save money. Seventy percent of the corpses donated for science to Alicante's Miguel Hernández University belong to Britons – in some cases simply to avoid the expense of a funeral. "Some of those who have approached me don't have much money," admits Lionel Sharpe, who helps the university recruit future corpses.

In contrast, Helen and Len Prior actually found the kind of Mediterranean paradise promised in the glossy brochures. Orchards of lemon trees line the road to their home at Vera, inland from the spectacular, volcanic coastline of Almeria. A garden, built up over six years, contains an acre and a half of palm trees and exotic plants. There is a heated swimming pool and a workshop-cum-garage area. There is, however, no house. That was bulldozed 17 months ago by the local authority, five years after they had moved in.

Where there was once a two-storey, £300,000 home – built with money from the sale of their old home in Wokingham – there is now just a large slab of concrete. "We'd be standing in the hall now," says Len, beside the workman's metal shed that now serves as their outside loo. Their dog Bonzo, traumatised by the men in big yellow machines, cowers from strangers.

The Priors, both 64, live in their garage while Spanish courts argue whether the local authority was right to declare their home illegal and knock it down. They won the most recent case, but will not get compensation any time soon. The glory days of gardening, swimming and relaxing in the sun have given way to worry and ill-health. Unlike others who bought illegally built homes without asking questions, the Priors did their homework and got their licences. "It was a dream," says Helen. "We were really happy here."

What they did not count on, however, was different levels of the Spanish administration, run by opposing parties, using them to wage a political war. The Priors admit that their Spanish is "awful" and so depend completely on their lawyer. To them the regional government is not socialist but "communist".

Their case has sent shivers through the British community, where fear of the demolition man is spreading. The letters pages of the Benidorm-based Costa Blanca News bubble with angry rants against Spanish tax authorities, police officers, town halls and, occasionally, Spaniards as a whole. For everyone who moans, though, another one leaps to defend the country they have all chosen to live in.

The Priors, who have more reason to complain than others, have not joined either the exodus or the anti-Spanish chorus. "People came and helped us who we had never seen before. We've had little old people hugging us and asking whether we have enough to eat," says Helen. "Spain is a wonderful country. We will still stay. We would never go back" •

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