19 Nov 2020
Repossessions & Evictions – Clarity for Mortgage Lenders
On 17 November 2020 the Financial Conduct Authority published further guidance for mortgage lenders and The Public Health (Coronavirus) (Protection from Eviction and Taking Control of Goods) (England) Regulations 2020 came into force in England & Wales.
FCA Mortgages and Coronavirus
The further guidance from the FCA is intended to ensure that the support offered through payment deferrals is flexible and accessible meaning customers will again be able to access payment deferrals up to a maximum of 6 months.
Customers will have until 31 March 2021 to apply for an initial or a further payment deferral. After that date, they will be able to extend existing deferrals to 31 July 2021, provided these extensions cover consecutive payments, and subject to the maximum 6 months allowed. Customers who have not yet taken a deferral, and who think they need the full 6 months should apply in good time before their February 2021 payment is due.
The FCA has also confirmed that no one should have their home repossessed without their agreement until after 31 January 2021
The FCA makes it clear that, save “exceptional circumstances” no lender should enforce repossession nor seek, or enforce, a warrant for possession or a warrant of restitution before 31 January 2021.
Only one example is provided as to what amounts to an exceptional circumstance: where a customer requests that the proceedings continue.
Importantly, the FCA say that lenders “may commence or re-commence and continue repossession proceedings, up to and including obtaining a possession order” provided that FCA guidance is followed, along with the usual requirements of MCOB 13 and applicable pre-action protocols.
Forbearance is, of course, strongly recommended but there is no ‘one--fits-all’ approach as to how long the FCA requires lenders to offer forbearance before starting court proceedings, which should be a last resort after all other reasonable attempts to resolve the position have failed.
Lenders are reminded to be “mindful” of the need for fair and appropriate treatment of customers who may be particularly vulnerable as a result of Covid-19 or otherwise and that cases should be assessed individually. Lenders must ensure that customers are kept fully informed, and the potential consequences of suspending any steps to enforce repossession should be specifically discussed.
Government ban on evictions
In parallel, the Government laid a statutory instrument in parliament restricting the enforcement of evictions in England until 11 January 2021. The secondary legislation was made on 13 November and came into force on 17 November 2020 and is known as The Public Health (Coronavirus) (Protection from Eviction and Taking Control of Goods) (England) Regulations 2020 (the Regulations).
The Regulations prohibit any person from attending a dwelling house for the purpose of executing a writ or warrant of possession, a writ or warrant of restitution or delivering a notice of eviction, or taking control of goods, until 11 January 2021. The Regulations apply to England only.
There are some exceptions relating to trespassers and rented properties concerning anti-social behaviour, perpetrators of domestic abuse in social housing, and extreme rent arrears (equivalent to nine months’ rent discounting arrears accrued since 23 March). There is no exception for mortgage arrears.
Although the heading of Regulation 2, which contains the operative parts, refers expressly to “Residential Tenancies”, the wording of the Regulation itself clearly applies to mortgage lenders and indeed all forms of enforcement of a dwelling house by writ or warrant.
Comment
After a period of uncertainty following the expiration of previous restrictions, the FCA guidance and the Government regulations bring some certainty to the coming months.
Lenders should proactively take action now to engage with customers, agree appropriate forbearance and they should feel empowered to commence or recommence possession proceedings in appropriate cases. The enforcement of possession orders can then follow after 31 January 2021.
Bearing in mind the volume of housing and possession cases that will be before the County Courts in coming months, we would encourage lenders to anticipate delays and act early.
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