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UK Regulator To Extend Ban On Home Repossessions To April

The UK Financial Conduct Authority on Wednesday said it is planning on extending its current ban on home repossessions to April 1 from January 31.

But consumer credit firms may be able to repossess goods and vehicles from January 31.

“This approach takes account of the worsening coronavirus situation and the government’s tighter coronavirus-related restrictions which mean that consumers could experience significant harm if forced to move home at this time as a result of repossession proceedings,” the regulator said.

It continued: “We recognise that there are also government bans on evictions in some nations, which could also prevent firms from enforcing home repossessions.”

The FCA’s current credit guidance means that before January 31, 2021 firms should not terminate a agreement or repossess goods or vehicles under the agreement that the customer needs, except in exceptional circumstances.

It is now proposing changing this so that consumer credit firms will be able to repossess goods and vehicles from January 31, 2021.

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It added: “However, this should only be as a last resort, and subject to complying with relevant government public health guidelines and regulations, for example on social distancing and shielding. Importantly, firms will also be expected to consider the impact on customers who may be vulnerable, including because of the pandemic, when deciding whether repossession of goods or vehicles is appropriate.”

The watchdog said this approach reflects the different risks and harms that customers with goods or vehicles on credit are likely to face compared to those who are at risk of losing their home.

The FCA said customers repossessing goods and vehicles under consumer credit agreements may be in the interest of the customer in the long term.

“The shorter terms and higher interest rates on these agreements, combined with the depreciating value of the goods or vehicles, means that they could end up owing more in the long term if repossessions are prevented,” the watchdog explained.

The FCA added: “Our approach, therefore, takes appropriate account of the risks to customers of further asset depreciation, whilst providing appropriate protections by ensuring that firms repossess only as a last resort and also consider the impact of repossession action on those who are vulnerable, as well as following relevant government public health guidelines and regulations when undertaking repossession action.”

By Paul McGowan

Source: Morningstar

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The North West is a repossession hotspot

There were 1,464 repossessions in the North West in the past 12 months, the most of any region, research from home buying platform Yes Homebuyers has found.

The North East (1,044) and Yorkshire and the Humber (1,029) also rank high with over 1,000 properties being repossessed in the last year.

In contrast, just 162 homes have been repossessed in the East of England in the last year, the lowest of all regions. The South West (439) and East Midlands (505) have also seen some of the lowest levels of homes repossessed.

Matthew Cooper, founder and managing director of Yes Homebuyers, said: “Falling behind financially and having to sell your home to cover outstanding debts is perhaps the hardest decision you will ever have to make. As a result, many of us fail to act and eventually face repossession of the property as a result.

“The real sting in the tail is that this often incurs more costs and the value of your home is significantly reduced during the repossession sale process. This means far less of your debt is covered compared to selling in the regular market.

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“Homebuying platforms can offer a lifeline in these situations, allowing those in financial hardship to sell quickly in order to pay off their outstanding finances while maintaining the final say in the sale of their hard-earned bricks and mortar asset.

“Luckily, only a small segment of those we see selling via Yes Homebuyer are doing so out of financial desperation. However, for those that find themselves with little other choice, we can provide a higher offer than they would see via a repossession sale and we can also complete in a very short time period so that they receive the funds quickly.”

The real salt in the wound of a property repossession is the price the property sells for, with those seeing their homes repossessed sold for far lower than they may otherwise have secured by selling themselves.

In this respect, Wales is the worst region to have a home repossessed with the average repossession selling for just £86,859; just 50% of the current average house price.

The East Midlands isn’t much better, with repossessed properties selling for just 55% of current market value, with the North East (60%), Yorkshire and the Humber (62%) and South East (68%) also seeing repossessed properties selling for less than 70% of market value.


Source: Property Wire

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8 big changes affecting your finances this month including end of furlough and payment holidays

OCTOBER is set to be a month of big changes for many people’s finances as coronavirus support starts to wind down.

From the furlough scheme and payment holidays ending, to new payments for self-isolating – here’s everything you need to know about what’s changing.

  1. Furlough ending

More than 9million people have been furloughed at some point during the coronavirus pandemic.

And on 31 October the scheme which has covered 80% of wages up to £2,500 each month will come to an end.

The Coronavirus Job Retention Scheme (CJSR) as it’s officially known was first announced in March and has undergone some changes since then.

That includes people being able to return to work part-time, a reduction to the slice of wages the government covers and an increase in how much employers pay as it has wound down.

A new scheme has been announced to replace the furlough scheme from 1 November, but it is stricter and unlikely to support as many people.

The Job Support Scheme will pay some of the wages of those able to work at least a third of their usual hours, with the government and the employer paying some of the hours not worked.

Sadly many workers are facing redundancy when furlough ends, but there are some important things to check if you face losing your job so you don’t miss out on money you’re owed.

2. Debt repayment holidays ending

People with loans, credit cards and other types of credit were offered the opportunity to take payment breaks to ease the pressure on their finances caused by coronavirus.

Banks and lenders were told by the financial regulator to make these payment holidays available for three months initially and then a further three months on top.

That includes:

  • credit cards
  • car finance
  • personal loans
  • stores and catalogue cards
  • buy-now-pay-later schemes
  • rent-to-own policies
  • payday loans

Many people have taken advantage of this, essentially pausing the money they have to pay back (though interest still builds up).

But this specific support won’t be extended any further and you have until 31 October if you want to apply.

After this, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank, lender or provider as soon as possible.

The help available will be tailored to individuals and may still include a payment break and other help, but it will not be the kind of blanket-wide approach offered before.

Anyone who has already taken a break will continue to pause payments for the period of time already agreed.

For example, someone who started a three-month payment break on 1 September would continue through to 1 December.

For anyone who taken a break and is still struggling when repayments start again, there are new rules for support and lenders must consider suspending, reducing, waiving or cancelling any interest, fees or charges to prevent the debts getting out of control.

Any new help you get from 1 November onwards can affect your credit score, whereas lenders had agreed that the support for borrowers before 31 October would not impact credit scores.

The bank should help you understand how any support you get can affect your credit file.

Remember, any breaks from payment must always be agreed with your lender – never just stop paying.

3. The end of interest-free overdrafts

Interest-free overdrafts of up to £500 have been made available to those who need it during the pandemic.

The deadline for asking for a three-month interest-free overdraft is 31 October.

Some banks offered an interest-free overdraft automatically during the pandemic – you didn’t end to request it – but these have now ended.

But you can still request one before the 31 October if you’re struggling.

And if you’ve already had an interest-free overdraft for three months, you can ask for a further three-month interest-free period before 31 October.

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Anyone who has had this support will be contacted by their bank to see if they need further help.

After 31 October, banks will still offer help, but this will be on a case-by-case basis.

This tailored support could include reducing or waiving interest, agreeing a programme of staged reductions in the overdraft limit, or support to reduce overdraft usage by transferring the debt.

Any new help you get from 1 November onwards can affect your credit file and your bank must explain this to you, whereas support before 31 October does not impact credit scores.

4. The end of mortgage payment holidays

Homeowners have been able to take a break from repaying their mortgage if their finances have been impacted by the pandemic.

More than a million people have already taken a break and anyone who hasn’t already done so has until 31 October to apply for one if they need it.

Those who have already taken a break can also still apply for a second pause before 31 October.

The break is temporary and interest still builds up which can mean you pay back more in the long term, the length of the loan can be longer or repayments higher when you start paying them back.

These payment holidays will not have a negative affect on your credit file.

After 31 October, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank or lender as soon as possible.

The help available will be tailored to individuals and may still include a payment break and other help, but it will not be the kind of blanket-wide approach offered before.

Support after this date may appear on your credit file but the bank should explain to you if that’s the case and what it means for you.

Mortgage lenders should get in touch with you when your payment holiday is coming to an end to explain what your options are.

Remember, any breaks from mortgage payment must always be agreed with your lender – never just stop paying.

5. Repossessions to start again

Home repossessions have been halted throughout the pandemic to prevent people from losing their homes.

From 31 October they can start again and whatever stage the repossession was at, it can continue from there after this date.

Anyone in arrears should get in touch with their bank and they may also be able to take advantage of the mortgage payment support outlined above.

Get in touch with Shelter for free advice if you’re worried about your home being repossessed.

  1. Insurance payment breaks ending
    Insurance customers have been able to take a break from paying their premiums if they’ve been financially affected by coronavirus.

There has also been other help on offer, such as reassessing customers’ risk profiles and tweaking policies to reduce premiums and waiving fees for any changes or cancellations.

Payment deferrals of between one and three months are available until 31 October.

This help will come to an end and from 1 November anyone struggling financially should contact their insurer directly to see what help may be available.

  1. New £500 quarantine payment
    Millions of families on low incomes in England will be paid up to £500 if they have to quarantine to stop the spread of the coronavirus.

Just fewer than 4million people on benefits in England will be eligible to the extra payment if they’re told to self-isolate, according to the government.

You will be eligible to claim the payment if you work full-time, part-time, self-employed or unemployed and you receive one of the following benefits:

  • Universal Credit
  • Working tax credits
  • ESA
  • JSA
  • Income support
  • Pension credit
  • Housing benefit

The payments are only available to those who can’t work from home and will lose income as a result and you will only get the payment if you have been asked by the official NHS Test and Trace team to self-isolate.

If you decide you have to quarantine because you are displaying symptoms, then you won’t be eligible for the funds, even though you’re following the guidance.

The payments will be available to anyone who has to self-isolate from 28 September onwards, but you’ll need to wait until your period of self-isolation is over before making a claim.

They will be managed by local authorities, like a payment scheme trialled in Oldham, Blackburn and Pendal, but the system isn’t expected to be running until 12 October.

Anyone who falls ill after the scheme launches but before the system is running will receive a backdated payment.

Find out more about the £500 quarantine payment here.

  1. State pension age increasing
    From 6 October the state pension age will be 66 for both men and women.

The minimum age for claiming the state support in old age was 65 but that has been increasing over the past few years to reach 66 this month.

And historically the age has been different for men and women but that has been equalised over several years.

So anyone retiring from 6 October 2020 onwards will have to wait until 66 at least (thought the age for accessing a personal pension is 55).

There are further changes ahead though, with plans to increase the state pension age to 67 between 2026 and 2028 and then to 68 between 2004 and 2046.

Bank of England chief economist Andy Haldane has slammed “Chicken Licken” doom and gloom views over the impact of coronavirus on the UK economy.

Self-employed parents have less than a week to claim coronavirus grants worth up to £14,000 if they weren’t previously eligible for them.

Homeowners will be given £5,000 in energy saving vouchers to help them insulate their homes – and you can apply now.

By Lynsey Barber

Source: The Sun

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BTL repossessions threaten to drive UK housing into deeper crisis

The government needs to address BTL regulation quickly to avoid a worsening housing crisis fuelled by buy-to-let repossessions.

According to property litigation lawyer, Mary Rouse, from law firm Wright Hassall, thousands of buy-to-let landlords will themselves face possession action by their lenders if temporary legislation is not revoked allowing them to evict tenants who are in breach of their tenancy through anti-social behaviour, domestic violence or large debt accrued before Covid.

Many landlords are currently under increasing pressure from their lenders to start making repayments on their buy-to-let mortgages, despite Government imposed temporary legislation preventing them from acting upon non-payment of rent.

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Under the present rules, families could be made homeless and with fewer properties available to rent, buy-to-let landlords could either lose their properties to their lenders or sell up.

Recent amendments to legislation include a one-month extension to the blanket ban on evictions, until 20 September 2020, while the amount of notice that a landlord has to give their tenant has been doubled from three months to six months until at least March 2021.

Rouse had this to say: “We need legislation that treats both landlords and tenants fairly and, at the moment, this simply is not the case.

“For landlords, the risk of losing their properties to lenders, who cannot keep extending payment holidays, looms, while the uncertainty for a lot of tenants is reaching breaking point, so something has to give.

“For me, the way forward is a very clear amendment which enables landlords to progress cases where a tenancy breach is non-Covid related, i.e. antisocial behaviour, domestic violence, or where substantial arrears had accrued before Covid began.

“Equally, money must be found to cover the full rent for tenants who find themselves in difficulty as a direct consequence of Covid until they return to employment.

“Only then will we start to see some stability in the rental market – security for tenants and income for landlords.

“Without swift intervention on both fronts, we will be faced with an increase in people being made homeless and fewer private rental properties, all of which will place an impossible burden on the already creaking social housing sector.”

Source: Property Reporter

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UK banks likely to hold fire on home repossession after pandemic, say analysts

Repossessing homes will become harder for UK banks seeking to recover properties when borrowers fail to keep up with payments on mortgages in the wake of the coronavirus pandemic, said analysts.

Recent guidance from the Financial Conduct Authority, or FCA, told banks to offer a range of “tailored repayment options” to mortgage borrowers affected by the coronavirus after the existing scheme offering a three-month payment holiday is withdrawn at the end of October. Customers will still be able to claim a three-month mortgage payment holiday, which in some cases could be their second or third deferral, up until the deadline.

So far 2 million mortgage holders have taken advantage of the payment holiday scheme, according to UK Finance, which represents banks. Among the U.K.’s largest banks, Lloyds Banking Group PLC had granted around 472,000 mortgage holidays as of June 30, while some 240,000 of NatWest Group PLC-provided mortgages were paused, according to data compiled by S&P Global Market Intelligence.

Though the FCA said banks and building societies will return to the tailored support they provided under its normal rules, the regulator also said lenders’ approach needs “to reflect the uncertainty and challenges” that many customers will face in the coming months.

This could see lenders take a different approach to borrowers who are struggling more than they did in previous crises, said Numis Securities analyst James Hamilton.

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“The banks will have to make decisions about how to deal with borrowers who lose their jobs, but also those who are ‘underemployed’ — customers who normally work on commission or bonuses, for instance, who have not been able to work as normal during the pandemic. Banks will have to decide whether to support borrowers who may have been in a good job for years but in a sector which has undergone profound change as a result of the pandemic, like cabin crew staff for airlines,” he said.

New social contract

Banks are likely to take a more nuanced approach to borrowers who find themselves in financial difficulty than they might have done in the past, as the FCA’s proviso on the need to reflect the uncertainty of the pandemic indicates, said Hamilton. In an era of low interest rates, banks are likely to offer some borrowers in trouble the chance to switch to an interest-only mortgage as an alternative to forbearance, for instance, he said.

However, lenders are likely to take a cautious attitude to repossession of properties where borrowers fail to pay.

“There were virtually no repossessions during the credit crisis, unlike in the recessions of the 1980s and 1990s,” said Hamilton. “Lloyds, the biggest mortgage provider, was state-owned then and the government made it quite clear that mortgage-holders were also voters so overall there were relatively few repossessions. Banks will have to be very careful about repossessions and since courts have been closed there’s likely to be a delay before legal action commences in earnest.”

John Cronin, analyst at Goodbody Stockbrokers, agrees with Hamilton, stating in a note to investors that the FCA’s guidance could herald a new approach for banks.

“We think a new social contract is emerging — the pain taken by certain segments of society will not be tolerated by the political system and someone will have to pay. We think repossessions will be more difficult, banks will have to work harder than ever with customers to achieve reasonable forbearance measures,” wrote Cronin.

Credit scores

Banks are likely to see a rise in mortgage forbearance when the regulator-approved mortgage holiday payment scheme ends next month.

“Undoubtedly, there will be more forbearance, when borrowers pause or reduce their payments, as the payment holiday scheme comes to an end. I don’t know anyone who thinks any differently,” said Hamilton.

S&P Global Ratings said it estimates that between 55% and 90% of U.K. borrowers have resumed paying their residential mortgages following payment holidays related to the economic impact of COVID-19.

The FCA noted that while the majority of customers who have had a payment holiday are expected to resume full repayment, “many will remain in financial difficulty.” It also said that while the payment holiday scheme will finish at the end of October, it “will keep this under review depending upon how the wider situation develops.”

The FCA warned banks that they should not take a “one size fits all” approach, and said the range of options that could be offered to struggling mortgage holders included extending the repayment term or restructuring the mortgage, while those borrowers most at risk should be referred toward debt advisory services.

Those mortgage holders taking payment holidays will see their requests reflected in their credit files, which could affect their creditworthiness. This is despite the government and the FCA initially telling consumers that a payment holiday would not affect their credit scores, which affects eligibility for future loans.

There has also been a change in approach to mortgage payment holidays by the Bank of England. When the scheme was first introduced, the BoE wrote to mortgage providers explaining that since coronavirus-related payment deferrals were being made widely available and were therefore not based on individual financial circumstances, they were not necessarily good indicators of significant increases in credit risk, credit impairments or defaults.

Marker of risk

However, following the FCA’s latest announcement, the BoE said that the tailored forbearance arrangements for borrowers who are not able to resume payments in full immediately after their payment holiday ends is as good an indicator of a significant increase in credit risk as forbearance was prior to the pandemic.

The FCA’s guidance comes as the U.K. mortgage market shows signs of recovery. The BoE said mortgage lending increased 6.74% month over month in July to £17.4 billion, though it was down 18.1% year over year. House prices were up 3.7% in August compared with a year previously, according to Nationwide Building Society’s House Price Index.

“House price rises might be hitting the headlines now, but in the second or third quarter of next year, it’s going to look very different,” said Hamilton.

By Jon Rees

Source: S & P Global