Negative equity hits 61,000 Scots households

ABOUT 61,000 Scottish households were in negative equity in the first quarter of the year - meaning they would owe money if their property was sold at today's prices.

The new figures, from the Council of Mortgage Lenders (CML), showed that across the UK the fall in the housing market since its pre-credit crunch peak had forced 827,000 home owners into negative equity.

Meanwhile, separate statistics from the Royal Institute of Chartered Surveyors Scotland showed that the number of new properties coming on to the housing market dropped in July.

Prices also fell, according to the vast majority of RICS member solicitors - with just 9 per cent saying they believed selling prices had risen.

The latest CML figure - which represents 7 per cent of property owners in the UK - is only slightly lower than the 900,000 who were in the position the last time the body carried out similar research, in April 2009, which was immediately after house prices saw some of their steepest falls.

But the CML said the number of households in negative equity was far lower than in the early 1990s when the number peaked at 1.6 million - nearly double the current number.

CML director-general Paul Smee said the problem only reached crisis point if someone was forced to sell at current prices.

He said: "Low interest rates and a relatively stable employment market are providing more options for borrowers and lenders in difficulty. What typically causes difficulty for households is an unexpected change in personal circumstances, like the loss of a job or the breakdown of a family relationship."

Homeless charities warned that people at risk from losing their property should ensure they took steps to find help."