Landlords facing repossession may be given lifeline

The Financial Conduct Authority (FCA) has opened a consultation on extending the repossession ban. Delaying repossessions further would give landlords who are struggling with their finances the lifeline they need. ;
Eviction ban

The Financial Conduct Authority (FCA) has opened a consultation on extending the repossession ban.

Delaying repossessions further would give landlords who are struggling with their finances the lifeline they need.

If approved, this could mean that repossessions are banned until the 1st of April 2021, an extension of just over 2 months.

Will FCA opt to take repossession ban to 1 year?

In light of the recent 3rd national lockdown and the continued effect of the coronavirus pandemic on incomes, the FCA has proposed extending their ban on repossessions until April.

This ban on repossessions currently applies to buy to let mortgage holders as well as residential mortgage owners.

If another extension goes ahead, the measures will have been in place for an entire year.

The last update to these mortgage and consumer credit repossessions was in November 2020, as the regulator aimed to keep the industry up to date with their latest developments.

Change to regulations

Alongside extending the ban, the regulator is proposing to loosen current restrictions.

This means that credit firms will be able to repossess goods and vehicles from the original end date of the 31st of January, however, they have firmly explained this will only be allowed:

“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.

This change comes about as they have assessed the risk and harm that could befall mortgage owners with goods or vehicle credit are likely to face compared to those who would risk losing their home.

Andrew Barber, an expert in financial services regulation at law firm Pinsent Masons, commented:

"The extension of the guidance on mortgages and consumer credit repossessions will help firms deal appropriately with consumers suffering payment difficulties and will enable firms to provide the ongoing support that is required. In light of the fast-approaching deadline, firms must continue to act swiftly and ensure that they are equipped to deal with the changes, particularly those around consumer credit repossessions, appropriately from 31 January."

How does this help landlords?

The extension of the arrears eviction ban in the UK last week saw landlords facing ongoing rental arrears have the prospect of future income pushed even further away. As a result, this breathing space from the FCA could be a significant help.

The FCA has explained:

“We currently anticipate that authorised lenders will voluntarily extend these further payment deferrals to customers who have unregulated buy-to-let loans, and if they do not do so this could have an adverse effect on satisfying the threshold conditions.”

If this FCA extension is approved, it will reassure borrowers that they will not have their property repossessed during this next step of an ongoing difficult year.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.