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Future in question: the £2billion King’s Cross railway lands project |
‘Homes are no longer an asset: they’re a liability’
• £2billion King’s Cross development under threat • Courts see surge in repossession cases • Town Hall warns of ‘dire’ economic outlook
THESE are bad times for Camden borrowers, big or small.
In the past fortnight, lenders have pulled out from two of the biggest developments in the borough – the £2billion King’s Cross railway lands.
And other banks are calling in their own debts, in the form of mortgage repossessions, threatening the homes of an increasing number of Camden householders.
On Tuesday, 25 home-owners faced possession actions from mortgage companies at Central London County Court, which deals with most of Camden and Westminster’s repossessions and has seen a 17 per cent jump in cases this year.
Both lenders and landlords can start repossession proceedings when payments have fallen just two months in arrears.
And the shortage of credit is also threatening businesses.
In the private quarterly economic bulletin due to be circulated among councillors next week, finance officers paint a bleak picture.
It warns: “In line with the Central London... and national economy, the implications of the credit crunch on Camden local businesses appear to be dire.”
But it is homeowners and tenants who are likely to feel the earliest bite of the crunch.
Ruth Camp is one of four solicitors on the housing team at Osbornes Solicitors, based in Camden Town.
Ms Camp said: “We have noticed an increase in people making enquiries about mortgage issues. For any person, the prospect of losing their home is a terrifying ordeal. When you can’t get any assistance, that makes that situation worse.
“There are many people for whom their house was their greatest asset – now it is becoming their greatest liability.”
She said homeowners in Camden were often left without legal assistance in fighting repossession.
While they cannot make their mortgage payments and face legal action, the nominal value of their threatened homes makes them ineligible for legal aid.
“Debt has long been an issue facing our clients, and now we are seeing debt affecting all kinds of people after an era in which it has been far too easy to get credit,” according to Debbie Hyams, manager of Camden’s Citizens Advice Bureau, based in Kentish Town.
“They’re stuck. Legal aid is not available and there’s not much they can do. Once people are in difficulties they should seek help early and concentrate on their homes. Credit debts are negotiable – keeping your home is essential.”
The threshold for legal aid – houses worth less than £210,000 – disqualifies virtually every property in the borough.
But while debt is afflicting those hit earliest by the credit crunch, the major developments Camden authorities hoped would fuel economic growth are faced with the opposite problem.
The developers of the 67-acre King’s Cross railway lands had to step in earlier this month to fund the first £400m phase of the works themselves when a consortium of banks pulled out of loan talks.
According to the Estates Gazette, the weekly property magazine, long-term talks to arrange £400million of financing for the first phase with a consortium of banks, including Deutsche Postbank and Eurohypo, fell through as the global credit crisis intensifield.
Argent, which is backed by the Hermes-managed BT Pension Scheme, has arranged emergency financing for works that must proceed if the eight million sq ft project is to hold on to its own flagship tenants – the University of the Arts London and the supermarket chain Sainsbury.
Argent has also agreed with LCR and DHL Excel that the money it will pay them for the site will be reinvested in the development. The agreement means that the finalisation of a limited liability partnership – in which Argent will invest around £160million of equity in the first phase while LCR and DHL contribute their land – has been delayed, the magazine says.
New funds will be raised when the banking markets reopen for business.
The Gazette also reports that it is the 350,000 members of the BT pension scheme whose money is behind the scheme, which has now been on the books for two decades.
It adds: “This week, Hermes faced the considerable embarrassment of being forced to stump up undisclosed millions to get work under way. This happened after a group of German bankers took fright at the very last minute and refused to provide the £400million of development financing for the first phase of the work.
“The news comes just weeks after Hermes-controlled developer Argent proudly announced the setting-up of King’s Cross Central. This is a limited liability partnership with the landowners London & Continental Railways and DHL – headed by Sir David Clementi, a former deputy governor of the Bank of England, no less.
“Argent announced Sir David’s appointment in the almost certain knowledge that it had raised a mortgage.
“But there was, of course, another pressing reason. It must either get on and build the 250,000 sq ft HQ for a waiting Sainsbury’s and the art college for impatient students – or abandon 10 years’ work and write off £35million in costs.
“Not much choice, really. No doubt someone will lend Argent some money.
“And in someone’s lifetime it will all be finished and the mortgage paid off.”
Sub-prime location: Even ‘fashionable’ Highgate has been hit by housing slump
ESTATE agents are twiddling their thumbs as the numbers of homes for sale in Highgate Village has fallen to their lowest level in years, writes Dan Carrier.
It is a far cry from just 18 months ago, when agents Anscombe and Ringland manager Angela Cruse told newspapers how she had no properties left on her books because of ferocious demand. She declined to be interviewed when the New Journal contacted her this week.
In 2006, at the height of the property market boom, Ms Cruse said: “There has been phenomenal growth and we’ve been lucky enough to benefit from it.”
Other managers from estate agents in Highgate have confirmed the recent slowdown has hit their trade.
Matthew Smith of Kinleigh Folkard and Hayward said: “It is incredibly quiet at the moment. Highgate is a desirable area, but this does not mean it is immune.”
He added: “We are starting to see a return of buyers into the market who think they be able to pick up a bargain. Prices have come down and they feel they can take advantage.”
Mark Sumray, a director at Benham and Reeves, believes that the number of people expressing an interest in buying a home has fallen by as much as 70 per cent.
He said: “Prices have dropped between 10 and 15 per cent since this time last year, but we feel the prices are now near the bottom and this means people are thinking now is the time to buy. As long as banks are prepared to lend, the market will recover.” |
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