Following on from my last post, the Daily Telegraph reports this morning on the rash of ‘flash sales’ companies.

If you get into financial difficulties, these property vultures pay quick cash for your home – at a discount of around 20 per cent.

You’d have to be pretty desperate to take up an offer like that.

Sadly, it seems plenty of people are, otherwise these firms wouldn’t be in business.

They opt for a ‘flash sale’ as a way of avoiding repossession, get cash to clear (hopefully) all their other debts, and then rent their old home back from its new owner.

Sue Anderson, head of member and external relations at the Council of Mortgage Lenders, says flash sale companies ‘have the potential to be a good thing’.

What planet is she on?

Okay, so people are not homeless – at least not initially – but they’ve lost a huge chunk of money that was rightfully theirs and no longer own the roof over their heads, all in the name of accessing a bit of quick cash.

These firms offer six-months leases, and as TV news reports have already pointed out, they won’t hesitate to evict the old owners after that time if they want to cash in on their canny investment.

Thankfully, Sue does add that a flash sale should be a last resort.

She says: ‘The first thing to do is have a conversation with your lender, who may allow you to defer payment, switch to an interest-only mortgage or extend the term of the loan.

‘The next step would be to seek independent advice from a debt-counselling operation such as National Debtline. Only then would you turn to selling the home.’

In an extreme emergency, she adds, lenders may allow homeowners a breathing space to sell their home and clear their debt.

Let’s hope these firms which profit from the foolishness and misery of others will turn out to be a flash in the pan.

This entry was posted on Tuesday, July 10th, 2007 at 8:00 am and is filed under UK Mortgages, UK Personal Finance, Debt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.