Exiting Unsustainable Homeownership: Understanding current practice and the potential of Assisted Voluntary Sales

By: Alison Wallace, Deborah Quilgars and Janet Ford, Centre for Housing Policy  Published: September 2011


There is an emerging debate about the ways in which borrowers with unsustainable mortgages can be helped to make the transition from ownership to renting, including help with selling their property on a voluntary basis. There is an assumption that, for borrowers, the emotional and financial distress typically associated with possession is likely to be lessened by an assisted sale and exit. There may also be reputational and business benefits for lenders in supporting sales, particularly in minimising the losses arising from negative equity.

Summary

Shelter commissioned this research as little is known of the extent to which support with voluntary sales is available, the form such support takes or the outcomes of sales for borrowers and lenders. The objectives of the research were to consider the content of the schemes, commonly termed Assisted Voluntary Sales, the extent of their use in the market, various parties’ experiences of the schemes and the outcomes achieved.

 

The research suggests that Assisted Voluntary Sales schemes can, potentially, be effective in delivering better outcomes for borrowers and lenders than possessions, but that significant obstacles need to be overcome for these schemes to be more widely adopted and to fulfil their potential. There is a role for lenders to demonstrate the merits of AVS approaches within the industry, to provide borrowers and advisers with sufficient information to legitimise AVS as an exit route and for lenders to work with advisers and local authorities to smooth borrower transitions into alternative housing.