The pandemic is dragging on for longer than anyone had anticipated when we first entered lockdown in March last year.

At the time, the upheaval for lenders was huge, but many would have predicted the upheaval to last six, or maybe, nine months at most.

Consequently, last spring, despite the moratorium preventing enforcement activity and large numbers of customers defaulting on loans with no immediate way of exiting, lenders went to great lengths to demonstrate that they were open for business and actively writing loans.

Now, we are in a position where some of the loans that were written during the first lockdown are starting to approach expiry, and whilst the overall picture looks tricky, there are some important differences.

Yes, a vaccination programme is being rolled out and there is a glimmer of an end in sight, but the country is in the midst of another, seemingly more restrictive lockdown, defaults on bridging loans are on an upward trend, the ban on physical evictions has been extended and the FCA is very likely to push back timelines soon.

The government-imposed restrictions on evictions, which were initially due to be lifted on 11 January 2021, will now continue until 21 February 2021, at earliest.

The FCA is also considering a revision of its guidance on repossessions. The regulator initially provided that firms should not enforce repossessions before 31 January 2021 and has proposed extending its guidance so that firms should not enforce repossessions before 1 April 2021.

These dynamics could signal liquidity problems for some bridging lenders. But the situation is not as bleak as it might first seem, and lenders are not as handcuffed as they were in March.

While the evictions ban has been extended, the court moratorium is no longer in play, which means that enforcement machinery is now available and is working – albeit less efficiently that pre-pandemic- save only for the final eviction act – which is understandable.

The courts may be experiencing backlog and delay, but they do appear intent on ensuring that hearings are able to proceed – remotely or otherwise – and with results that speak to the case not the pandemic.

In our experience, the courts have shown so far, they do grant orders for possession, despite the current climate.

Possessions will have to await a better, safer environment, but you can take cases up to the point. So when restrictions are lifted, lenders who are sensible, pragmatic and forward-thinking, will be in the best position to move early, if there is no alternative to that final act of enforcement.

We know in practice that an order alone, in most cases, is the step that concentrates the mind, and more often than not, the driver to refinance or voluntary sale.

Progressing recovery action can encourage or kickstart dialogue with borrowers. Often presenting the financial implications of continuing to delay the inevitable and providing worked illustrations cuts through the legalese and brings people to the table, or senses, or both.

So, as we approach the first anniversary of the Coronavirus crisis, lenders have new choices – whether to sit on their hands or to get on with progressing a significant function of their business.

The continuing ban on evictions does not prevent formal action. Lenders can place themselves in the queue (the queues are long and getting longer) so that they are in a position to enforce as and when the guidance permits.

Latest Brightstone data collected since moratorium

Some averages:

• Review hearing dates are being listed within a little over 11 weeks, following reactivation/issue of a claim.

• Substantive Possession Hearings are being listed just under 7 weeks following Review.

• From the point of reactivation/issue, it is taking just over 15 weeks in total to reach the point of a possession hearing.

• Most importantly, orders for possession are being made. Of the hearings that have progressed to a possession hearing, 75% of those have resulted in an order for possession.

• Requests for adjournments due to an inability to attend, as a result of Covid or otherwise, have been able to proceed remotely – which is one small positive advance on pre-covid experience.

• Of the hearings where an order for possession was not granted, Covid has NOT been the underlying reason.

• We are yet to see a single case be Covid marked by the Court – i.e in need of special treatment.

• Following reactivation/issue of a claim, 19% of the review hearings have been vacated as the act of enforcement has prompted redemption or some form of agreement having been reached with the borrower(s).

Jonathan Newman is senior partner at Brightstone Law