FCA confirms repossessions will resume from April

The Financial Conduct Authority states that home repossessions will resume from 1 April 2021, but repossession should still be the last resort for firms and lenders.

The pandemic has caused the UK economy to contract more than it has done in the last 300 years. With household income decreasing, repaying mortgages each month has never been so tough for so many.

In November 2020, the FCA announced that lenders were banned from repossessing homes in response to the global pandemic. This was to support families experiencing mortgage repayment difficulties due to reduced income and unemployment. The only exception to the repossession ban was in cases when homeowners asked for the repossession to go ahead.  

This is one way that families with mortgages have received support during the pandemic. Other families may have opted for mortgage repayment holidays lasting as long as six months.

FCA Confirmed Repossession Ban Extension

The initial repossession ban was enforced until 31 January 2021 but was then extended until 1 April. No lender or firm can repossess a property until this date passes unless the homeowner requests that the repossession goes ahead, which can be beneficial in some cases.

FCA Confirms Repossession Ban to End

There were some calls for the repossession ban to be extended even further than April, in line with extended government support packages that have also been extended. However, the FCA has recently stated that repossessions can resume as of 1 April. After this date, any lender wanting to repossess a property has the power to do so, as long as their actions conform with current regulations and standards.

This means repossessions will only be used if all reasonable attempts have been made to resolve the matter to meet repayments (possibly reduced mortgage repayments). Repossessing a property should still only be used as a very last resort as per the existing lender regulations.

Why Is the Repossession Ban Not Being Extended?

Some were calling for the repossession ban to be extended in line with other pandemic support extensions. However, the FCA stated that extending the repossession ban could have negative consequences on homeowners if they end up having their home repossessed later.

For example, suppose a homeowner uses the ban to avoid having their property repossessed but still fails to meet repayments (possibly due to further unemployment). In that case, the balance they need to repay will increase, and the equity they have in the home will gradually erode.

What Should You Do if You Are Struggling to Repay?

If you are worried about the end of the repossession ban, you should first speak with your mortgage provider to seek further support. They should be offering tailored support to help homeowners and families get through the difficult period. This may include reduced mortgage repayments for a set period or payment holidays.

April 2021