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Around 840,000 tenants face pandemic evictions: NLRA

Around 840,000 tenants who have fallen into arrears are in danger of losing their homes as a result of the pandemic, according to data from the National Residential Landlords Association.

The landlord’s body says that seven per cent of private renters have built up arrears since the UK’s series of national lockdowns began last March.

The average arrears were between £251 and £500, though 18 per cent, or approximately 150,000, of those with rental debts owed more than £1,000.

The NRLA says: “These debts are increasing to the point where there is no hope of many being able to afford to pay them back. The outcome will be that most will have to leave their homes as emergency measures taper down from June.”

The body claims that although most landlords have been working with struggling tenants to help keep them in their homes as far as possible, 60 per cent have lost rental income as a result of the pandemic. Of these, 39 per cent said their losses are mounting.

The intervention comes as courts begin to hear possession cases again following a six-month stay on proceedings imposed by the Financial Conduct Authority due to the pandemic.

Courts are hearing the most serious cases such as those related to anti-social behaviour, criminal activity such as fraud, and where arrears were amassed before lockdown measures began.

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However, the NRLA said the justice system is facing “strains” in this area, as they are “hearing the relatively few cases that are being allowed to go ahead”.

The body has called for video links to speed up cases.

It has also renewed its call for a package of hardship loans and grants for affected tenants to pay off arrears built since the beginning of the health crisis, so tenants can stay in their homes and are prevented from facing damaged credit scores.

NLRA chief executive Ben Beadle says: “While many landlords and tenants have worked well in responding to the challenges posed by the pandemic, we are now at a crunch point. As the country follows the roadmap out of lockdown, so too emergency measures in the rental market will need to be eased.

Beadle adds: “Ministers need to ensure the tenants have the financial means to pay off rent debts built as a result of the pandemic. Without this, they will have to accept the inevitable consequence of rising homelessness and damaged credit scores.”

Repossession claims by private landlords in the final three months of last year fell by 37 per cent compared to the same period in 2019, according to Ministry of Justice data released last month.

However, the Ministry of Justice statistician said these early figures, which cover England and Wales, should be treated with “caution”.

The statistician adds: “While these statistics are of interest to the public, it is worth noting that the small volumes of repossession actions mean that the data is unlikely to be representative of general trends in possessions. Caution should therefore be used when interpreting and applying these figures.”

By Roger Baird

Source: Mortgage Strategy

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Home repossessions to leap more than ten-fold by 2022

A UK Finance forecast suggests UK mortgage arrears and repossessions will surge after the debt payment moratorium ends on 1 April 2021.

The regulator is keeping this date under review, but UK Finance forecasts suggest we could see home repossessions rise from 2,900 last year to 22,300 by 2022.

Mortgage arrears will also rise to 142,200 this year from 81,300 last year according to the trade body, but fall back to 120,900 in 2022.

A UK Finance spokesperson said: “Possessions last year reached an historic low due to the moratorium introduced in March 2020, alongside the unprecedented support provided by lenders to customers impacted by Covid-19. However, we anticipate possessions will likely increase as these emergency measures are lifted and lenders work through cases that have been put on hold, most of which were already in train before the pandemic.”

He said the number of possessions is forecast to remain well below the levels seen a decade ago and lenders will continue to show flexibility to borrowers in financial difficulty, turning to possession only as a last resort after a thorough court-based process has carefully considered the borrower’s individual circumstances.

“There is a range of tailored support available and possession is only ever a last resort, so we would urge customers facing financial pressures to get in touch with their lender to discuss the best solution for them,” he said.

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FCA guidance released this month: ‘Mortgages and Coronavirus: Tailored support guidance‘ outlines the protocols mortgage lenders and other financial firms should employ if borrowers are struggling.

Its payment deferral guidance confirms all borrowers can delay payments for up to six months as long as the last monthly installment is no later than July 2021.

All customers should receive appropriate forbearance from their lender and the regulator states: “Customers should receive the support they need in managing their finances, including through self-help and money guidance. Firms should signpost or refer them to debt advice if this meets their needs and circumstances.”

The regulator offers consumer guidance here to share with clients, including speaking to the lender in the first instance and repaying anything toward the monthly payment, even a reduced amount.

Sue Anderson, spokesperson at debt charity Stepchange said: “While we haven’t yet experienced the tsunami of demand for debt advice that is forecast to arise when temporary forbearance ends, we know it is coming. The tenfold forecast increase in mortgage repossessions by 2022 anticipated by UK Finance is obviously a real worry. Housing insecurity, across both the rented and owner-occupied sectors, looks to be one of the most damaging impacts from the pandemic if left unchecked.”

Anderson added that StepChange anticipates increased demand for holistic advice on housing and other debt that will emerge as payment deferrals and other temporary help unwinds.

“The ban on rental evictions and mortgage repossessions and the extension of payment deferrals have all been important in keeping people hit financially in their homes, but it’s abundantly clear that we also need long-term plans to address the household debt legacy that the pandemic will leave in its wake,” she said.

“Revisiting Support for Mortgage Interest should be a part of this – the safety net isn’t currently fit for purpose in supporting households to keep their homes in the post-Covid landscape,” said Anderson.

By Victoria Hartley

Source: Mortgage Solutions

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