Leaders of the former steelworking town of Corby hope it can build its way to prosperity, but many who moved there are trapped in negative equity
“You could own this home for as little as £451 a month,” yells the advert for a four-bedroom townhouse set in rolling green fields little more than an hour’s train journey from London.
Welcome to Corby, Northamptonshire – or “North Londonshire”, as the marketers would rather have you call it.
This rather nondescript former steelworking town may not have much in common with Bond Street or Brick Lane, but the local council believes it can tempt city-weary Londoners into relocating from the capital – and reviving the region.
But the town has another moniker – one Chris Mallender, chief executive of the borough council, is a little less keen on: repossession capital of England. “Can you stop saying that to everyone,” he says as he gives the Observer a guided tour of the town. “There’s a lot more to it than that.”
But Mallender can’t argue with the figures: 155 households in Corby were issued with possession orders by the courts in the last financial year. That works out at 7.6 out of every 1,000 privately owned homes, compared to 0.8 in west Dorset and the royal borough of Kensington and Chelsea, in central London.
And Corby is streets ahead of the second most repossession-blighted local authority in the country, Barking and Dagenham, with 6.6 per 1,000.
“People expect us to be horrified, but I have to say we’re not,” says Mallender. “It’s a consequence of the rapid growth we’ve achieved. The most dynamic economies are the ones most exposed to failure.”
Mallender, who was drafted in to spearhead Corby’s regeneration eight years ago, says the town’s turnaround strategy has been, and continues to be, build, build, build.
“Our strategy is based on increasing the population to generate wealth to increase prosperity,” he says. “We’re now the fastest growing borough in the country.”
More than £500m has been invested in the 60,000-person town over the past six to eight years, Mallender says. And it shows: almost every lamppost is adorned with yellow signs pointing the way to new developments.
One of the more established developments, Oakley Vale, is mostly occupied, but roads and roundabouts jutting out into empty fields clearly show plans for more.
Working in the front garden of one house is Anthony Dady, 36. It isn’t his, but he owns a four-bedroom detached house in a nearby development.
At first glance Dady appears to be one of Corby’s success stories. He relocated from Hampshire after seeing the town’s “room to breathe” adverts. “I saw what I could get for my money and thought it would be silly not to,” he says. So he sold his three-bed semi in Hampshire and bought the Corby four-bed for £160,000 just before the 2007-8 property crash.
Dady, a local councillor, is now one of millions across the country sitting on negative equity, as his house was last year revalued at £135,000. Dady, who took out a 90% £140,000 mortgage to buy the property, reckons it might have crept up to even by now.
He is also one of thousands of Corby homeowners struggling to keep up with his mortgage repayments. “I haven’t had much work for the last few years, which is making it tricky,” he says. “At the moment I’m phoning my mum up every month to borrow slightly less than £1,000, but eventually she’ll run out too.”
Although Dady acknowledges he is probably sitting on negative equity, he says it would be “silly” to hand back the keys. “Because where would I be then? I’d have to move into a bedsit … I like my four-bedroom house.”
When Dady moved to Corby he had planned to buy a second home to rent out for income, but failed to find one he liked. “No, I wouldn’t say it was a lucky escape,” he says. “I’m still a believer in making money from property. Other people may not think its a good economic decision but I think it is.”
The estate agents that line Corby’s recently redeveloped, yet already neglected high street, are united in agreement that it is people like Dady who account for most of the town’s “repos”.
“They get the idea from property programmes on the telly that there’s loads of fast money to be made from property,” says an estate agent at WH Brown, which takes one or two new repossessions every week. “They clearly haven’t got enough money, but the banks were happy to offer more than 100% mortgages – even today you can get a 95% mortgage.”
A quick walk around the corner past two pawnbrokers, Richard Sharp, a valuer at rival estate agent Yates Walker, tells the same story.
“A lot of the repos are from investment buyers who are stretching themselves too much,” Sharp says. “They’ve flooded into Corby, attracted by the cheap property and good rents.
“The problem is that as the cost of living has gone up, lots of the tenants – often Polish and eastern European – have gone home. So owners are struggling to pay the mortgage as their rental income is nose-diving.”
According to Sharp, three-quarters of the repossessions are not, as one might expect, the “really nasty ones” from the sink estates in the centre of Corby but “lovely ones” in the new purpose-built estates.
“Homes that people bought for £220,000 are being sold by their banks for £160,000,” he says. “You would never know that they were repos, some of them are only two or three years old.
“The really worrying thing is all these modern developments are still going up and people are buying them at peak prices because they think they’re so much cheaper than in Bedford or Luton or Milton Keynes,” he says. “They’re not worth it and when interest rates go up – which is only a matter of time – I dread to think what will happen.”
Sharp says lots of homeowners are only making their repayments at the moment from juggling credit cards; and he predicts that when interest rates go up they will be tipped into repossession.
Campbell Robb, chief executive of Shelter, the housing charity that published the research that gave Corby its unwelcome title, predicts that a further 2.5 million will struggle to pay their mortgage if the base rate goes up by 1% from the current record low of 0.5%.
The Bank for International Settlements (BIS), the international bank regulator, last week said keeping rates as they are was unsustainable ,and experts are predicting a rise in the next few months.
Richard Banks, chief executive of UK Asset Resolution, the body that runs the £80bn of Northern Rock and Bradford & Bingley mortgages that were bailed out by the taxpayer during the banking crisis, has warned that there will be a “tsunami” of repossessions.
The wave will hit Corby hardest just as the town’s army of builders gears up construction at the town’s biggest development.
Where once Corby hoped to build a WonderWorld theme park to rival Alton Towers, it is now creating Priors Hall, “a new destination development that strikes a perfect balance between contemporary and countryside living”.
This 5,100-home, 600-hectare (1,500- acre) development is at the centre of the region’s multimillion-pound advertising campaign to attract Londoners, with houses named Marylebone, Islington and Knightsbridge. However only seven of the 102 homes built so far have been reserved by Londoners.
It clearly takes more than a gimmicky name. Something the developers of Possession, the estate with the £451-a-month home, might need to take on board.
