Rising arrears but falling court actions for repossessions
Following the declaration of Coronavirus pandemic lockdown and emergency measures in March 2020, the economic effects of furlough and rising unemployment began to take their toll. Over the next few months, many householders saw their incomes reduce and personal savings dwindle.
In line with expectations, rent and mortgage payment arrears rose during the final quarter of 2020. Increasingly hard-pressed to meet their monthly payments, thousands of mortgage borrowers and tenants sought help.
Nonetheless, statistics from the Ministry of Justice available on the gov.uk site show a marked reduction in mortgage lender and landlord possession proceedings. Announcements by the Financial Conduct Authority (FCA) and the Coronavirus Act 2020 meant that possession actions of all types dropped to unprecedentedly low levels.
The total number of related court cases was reduced by more than two thirds (67 per cent) in the last quarter of 2020, compared to the same period the previous year. As the published graphs illustrate, possession orders, warrants and repossessions dropped by around 90% in rent arrears cases. Similarly, evictions fell to near-zero levels for mortgage customers in financial distress.
More than four in ten repossession claims (43 per cent) came from private landlords, while social landlords filed more than a quarter of the total (27 per cent). A third of the actions were under the accelerated claims procedure.
Significantly, the official data showed that the median time from initiating a claim to the eventual execution of a possession warrant, if applicable, had doubled from 21 to 43 weeks. Property experts pointed out more than 800,000 tenants throughout England and Wales had built up their payments arrears since spring 2020.
In turn, landlords had suffered cash flow problems. In the circumstances, legal action was the last resort but in the absence of alternatives, property owners needed to follow the correct procedures. Otherwise, they might become liable for damages for unlawful eviction. Even in straightforward cases, legal and court fees were currently in the region of £800.
Repossessions by banks, building societies and other residential lenders had reduced almost to zero by the end of 2020. However, by that time, courts had begun to process applications and grant orders again, following a six-month moratorium on evictions. Possession actions relating to mortgaged properties had increased from 37 weeks to 47 weeks.
Possession claims by mortgage lenders and landlords fell across all regions, while landlord claims remained highest in London. In particular, areas to the north of the capital featured prominently in the reported totals. In Barney, Hackney, Haringey and Newham, four in ten households now rely on benefits including the housing element of universal credit.
–Additional source: ‘The Guardian’ article ref findings by Conservative thinktank Bright Blue.
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