A new way for assisted voluntary sales

Connells Asset Management has unveiled a new solution for lenders and borrowers to avoid repossession, which it believes will revolutionise the assisted voluntary sale (AVS) process.

‘AVS Fresh Start’ is the first AVS product to incorporate an insurance element designed to overcome the usual onward housing barriers associated with AVS.

Teresa Scales, operations director for Connells Asset Management launched the new service today at the CML’s Mortgage Arrears and Possessions Conference in Leeds.

Scales believes it will help lenders incentivise borrowers to go down the AVS route rather than have their home repossessed. At the same time it will ensure borrowers can be re-homed in private rented accommodation and without the stigma attached to repossession.

It will also alleviate being classified as intentionally homeless by local authorities which can prevent housing benefit assistance.

Scales said: “Until now, there has not been a high take-up of the AVS schemes lenders have offered. Indeed, recent research from the charity Shelter in March 2012 found only 345 borrowers on AVS between 11 different lenders.

“This is mainly because AVS does not currently address the critical concerns from borrowers about re-housing options. Existing schemes were littered with problems and disincentives for the homeowner, not least of which was the fact they were classified as ‘intentionally homeless’ by some local authorities if they decided to go down the AVS route.

“Our new programme incorporates a number of innovations, the most significant being an insurance policy which protects the landlord by underwriting the borrower, so the borrower can secure private rented accommodation without the need for a deposit and with a known poor credit history.

“The lender clearly benefits from selling the property at a higher price as an occupied residence and avoids the costs and delays of formal repossession proceedings.”

Connells Asset Management is urging lenders to identify and engage with possible ‘AVS Fresh Start’ candidates at an early stage in order to help borrowers with the re-homing process and maximise the success of the programme. The new scheme will provide lenders an exit strategy which offers a greater control of cost than previous AVS offerings.

Scales added: “We believe we have found the solution to what was previously holding back the success of AVS, which is great news for both lenders and borrowers who are facing repossession.

“It is in all parties’ best interests to find an exit strategy which works for the lender and the borrower. By removing the onward housing issue for the borrower, there will be big incentive for them to go down the AVS route and avoid repossession.”