Hard times for British expats in the Florida sun

Published 09th Mar 2010

Florida's once-booming housing market is at the heart of America's financial crisis. In 2006, an average family home was $248,000; by 2009, that had fallen to $142,000


A short hop from Disneyworld in the heart of Florida, there's a little slice of Britain on offer at Harry Ramsbottom's pub. Cornish pasties, beans on toast or the house speciality, fish and chips, are on the menu. A policeman's helmet jostles for space behind the bar with Scottish banknotes and a pennant depicting a Welsh dragon.

But times are hard in the sub-tropical sunshine. On a recent weekday afternoon, the bar was deserted, with a Premier League football match flickering forlornly on television. Harry Ramsbottom's is the only operational business in an all-but-abandoned shopping centre – the rest of the strip mall, along a main highway west of Orlando, has been repossessed by the banks.

"We're having a wretchedly hard time," says Rodney Forton, who moved from Leeds to Florida in 1994 and runs the pub with his wife, Pamela. "We've got fewer bums on seats, and the bums we've got left don't have as much money on them."

Forton, whose pub is up for sale, reckons the number of British tourists visiting the area is down by as much as 40%. His regular customers – second homeowners – have been hammered by a devastating property collapse, with the value of their holiday homes plummeting by as much as two-thirds.

Florida's once-booming housing market is at the heart of the US financial crisis. In 2006, the average price of a family home in the state was $248,300 (£164,000). By 2009, that had fallen 43% to $142,600 according to the Florida Association of Realtors. And the worst-hit region of the state is the area surrounding Orlando, a haven of theme parks, lakes and golf courses that act like a honeypot for sun-loving expatriate Brits.

The British consulate in Orlando estimates that 400,000 British expats live in Florida and 1.5 million tourists visit the state each year, ranking Britain second only to Canada among the origin for overseas visitors. Many property owners spend a few months a year in the state and rent out their houses for the rest of the time. Almost all have been badly burned.

Antony and Katrina Heard, a couple from Cornwall, spent $475,000 in 2004 on a four-bedroom corner house in a development called Regal Oaks, just across the road from an amusement park, Old Town in Kissimmee. The estate was never completed, the developer went bust and a similar neighbouring property recently sold for a paltry $100,000.

"It isn't worth a fraction of what we paid for it. We probably got sucked into the hype and the figures," says Heard. "I suppose, with hindsight, we should have waited and bought now."

The Heards, unusually, were cash buyers. Most British homebuyers in Florida used mortgages, often from Lloyds TSB or Bank of America, which used to offer promising terms for international buyers. Buyers are now deep in the mire of negative equity.

Faced with mortgages far higher than the value of their property, some British owners have simply abandoned their properties. Patricia Kawaja, founder of the Florida Association of British Businesses, says: "We've had cases of Brits just leaving their homes and going back to the UK owing money. There's no extradition treaty for people unable to pay their mortgages."

Dean Churm, the British consul general in Orlando, backs this up. "I've certainly heard of it happening. The Orlando area has been particularly badly affected by the property bubble that burst," he says.

Central Florida has scores of British estate agents who made a good living, at the peak, helping buyers find their dream homes in the sun. Life is less easy now. Richard Veale, a broker at Profiles Realty, moved from Essex to Florida five years ago. He says demand for second homes has dried up: he sold 13 properties to British holidaymakers in 2008 but just two last year, although business buyers keep him busy.

"Buying a property is easier here than in Britain – you sign a contract and you can complete in just two or three weeks. There's never a chain," says Veale.

As distressed homeowners from Detroit to Las Vegas can attest, banks in the US foreclose on property far more quickly than their British counterparts. Tens of thousands of bank-owned homes are now on the market, often selling at mass auctions – Veale is fresh from showing off a three-bedroom townhouse priced at $120,000.

Sean Snaith, director of the University of Central Florida's institute for economic competitiveness, says prices have fallen below the bricks and mortar replacement cost of properties in many parts of the state. "Prices can't stay down there forever," he says. "There's no incentive to build and replace inventory."

He believes Florida is at, or close to, the bottom in terms of the slump, although with so many vacant homes to sell, it could be a long haul to recovery.

"There have been some severe downturns historically in Florida," says Snaith. "But the severity of this housing recession, together with the financial crisis and the pronounced credit crunch, has certainly made this one for the ages."

Banks are being browbeaten by the Obama administration to lend once more, yet many are still risk-averse and are under pressure from regulators to raise their capital ratios.

Florida's highways are littered with so-called "bandit signs" stuck into grass verges with offers of homes for sale. Dave Robertson, a Glaswegian expat who works for Orlando-based Dolby Properties, has a sanguine view of those who lost out: "There are countless numbers of people who paid way too much for properties. Greed got the better of them at the end of the day. They saw the market rocketing and tried to jump on."

There are hopes, though, that a new Harry Potter theme park, set to open this spring, will reinvigorate the British visitor trade. The venue, based on JK Rowling's young magician, joins a crowded clump of big-budget attractions around Orlando including Universal Studios, SeaWorld, Gatorland and even the Bible-themed Holy Land Experience.

Robertson, who has a five-bedroom house on his books for $118,000, insists the Brits will be back, lured by a potent combination of sunshine, relaxation and rollercoasters.

"It's not all doom and gloom. In my lifetime, we're never like to see another opportunity like this," he says. "If I had a pocket full of change, I'd have bought a dozen properties by now."

Source: ' Guardian '

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