The Financial Conduct Authority (FCA) has proposed to extend the ban on the repossession of homes for those unable to pay their mortgages due to ongoing lockdown measures across the UK..
Editorial Team | 16th January, 2021
The current ban which was due to expire at the end of January will now following consultation be extended until 1 April. The moratorium on repossessions would apply to both homeowners and landlords of buy-to-let properties.
The regulator said this takes into account the worsening coronavirus situation and the government’s tighter coronavirus-related restrictions, which mean consumers could experience significant harm if forced to move home as a result of repossession. The regulator recognized there were also government bans on evictions in some nations, which could prevent firms from enforcing home repossessions.
Why is this happening?
The FCA had previously called for lenders not to enforce repossession orders before 31 January, except in exceptional circumstances.
It is proposing extending this guidance until 1 April due to the worsening coronavirus situation in the UK and the government’s new lockdown measures.
It said the latter meant people could experience significant harm if they were forced to move because their home was repossessed.
What support is available?
Mortgage lenders have introduced a range of support measures to help homeowners and landlords whose finances have been impacted by the pandemic.
The option of taking a mortgage payment holiday, under which people can defer making their monthly repayments for up to six months, has been extended until 31 July, although consumers will have to apply by 31 January if they want a full six-month deferral.
For borrowers who have already taken a six-month payment holiday, lenders are offering tailored support, including accepting reduced payments for a period of time, switching them to an interest-only mortgage or extending their mortgage term.
More than 2.7 million mortgage payment holidays have been arranged since the scheme was first launched last March, with around 127,000 deferrals in place in mid-November 2020.
What should I do if I can’t pay my mortgage?
If you are struggling to keep up with your mortgage payments it is important to contact your lender as soon as possible, as you will have fewer options if you are already in arrears.
If you want to take out a mortgage payment holiday, follow the instructions on your lender’s website, as many lenders have set up an online application process.
If you want to request a different option, such as switching to an interest-only mortgage, you should contact your lender directly.
What’s the background?
The proposal to put repossessions on hold until April follows a similar move to ban tenant evictions until at least 21 February 2021 in England, and 31 March in Scotland and Wales.
The only exception to the ban is for evictions due to anti-social behaviour, illegal occupation, fraud or rent arrears. Landlords are also required to give their tenants a six-month notice period if they want to evict them until at least 31 March.
Draft guidelines have been published on the FCA website and it is inviting comments with a deadline of 10am on 18 January 2021.