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 Many housing associations are buying repossessed properties for these very reasons and then renting them out after the necessary works have been done. They have the money in hand to carry out the renovations and are very unlikely to default on the loans. They are therefore considered 'safe' pairs of hands by lenders.
This benefits everyone because the more repossessed properties are taken out of circulation, the more other house prices can rise. The more values rise, the more companies can grow as businessmen can once again secure their loans to expand. The depth of the last recession in the UK was as much to do with credit squeeze (individuals and businesses not being able to borrow) as it was with temporarily high interest rates and a drop in overseas business.
If you have to borrow money to buy at a repossessed property auction either:
- Borrow against your current property if you have enough value left in it and then transfer the loan to the new property when you are about to move in and have completed any necessary works.
- Only go to those auctions where the lenders doing the selling are also providing special mortgage deals to help with the purchase.
At the height of repossession auction sales, building societies frequently offered very preferential rates to purchasers just to get rid of the properties. Obviously under these circumstances there is far more pressure on the building society to lend under less than ideal conditions, whereas another society coming in would take a different view (after all, why should one society take on another society's failures? It's a similar approach as taken by bank managers when you are looking to move your overdraft from one bank to another. The first question asked is always ,"Why?").
There will always be repossession auctions because houses are repossessed every year, regardless of the state of the economy. However, we've been through a unique period where individuals overborrowed to a frightening degree and then property values fell. It's easy to say that we never learn by our mistakes and that a similar situation will occur again in the future. However, probably not in our lifetimes, so make hay whilst you still can and there are good deals still available. Property prices are hardening now...
building society 
remortgage 
repo property 
repossession 
valuation 
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