Mortgage repossession claims “dropped to unprecedentedly low levels”, according to the Ministry of Justice data in the first three months of the year, but as lockdown restrictions ease brokers fear sharp rises.
Possession claims, orders, warrants and repossessions by county court bailiffs plummeted by 85%, 96%, 99% and almost 100% respectively, in the period compared to a year ago.
While landlord possession claims, orders, warrants and repossessions by county court bailiffs plunged by 74%, 72%, 80% and 96% respectively.
The Ministry of Justice says: “The Financial Conduct Authority announcements and the passing of the Coronavirus Act in March 2020 means that possession actions of all types have dropped to unprecedentedly low levels.
“As a result, the data is unlikely to be representative of general trends in possession actions. Caution should therefore be used when interpreting and applying these figures.”
Falls in possession claims were recorded across all regions, although landlord claims remain concentrated in London, with 9 of the highest 10 claim rates.
The median average time from claim to landlord repossession jumped to 57.6 weeks, up from 21.1 weeks in the same period 12 months ago.
In March, the government extended the residential repossessions ban that had previously been set for 1 April to the end of May.
Coreco managing director Andrew Montlake says: “Lenders and landlords alike have, quite rightly, been patient throughout the pandemic as many people struggled with their businesses, were put on furlough pay, or sadly lost their jobs. This is reflected in these very low figures.
“As we start to emerge from the pandemic and all the various government support measures come to an end, there is, unfortunately, likely to be an increase in the number of repossessions.”
Shaw Financial Services founder Lewis Shaw adds: “The legislation put in place by the government during the pandemic has seen repossession levels by both mortgage lenders and landlords fall off a cliff.”
“Any repossession, be it by a landlord or mortgage lender, is an upsetting time. Where possible, all tenants and homeowners should have sufficient savings, ideally six months of net income, to cover any unforeseen eventualities.”
Langley House Mortgages cofounder Robert Payne says: “The mortgage payment holiday option ended on 31st March 2021 so those who are still unable to afford their monthly payments have some difficult decisions to make, with the number of mortgage defaults expected to rise.”
“While borrowers were reassured that taking the payment holidays will not affect their future borrowing, it is not clear how lenders will differentiate between those struggling as a result of the pandemic and those who have been unable to manage their finances.
“I sadly predict that tenants and borrowers worst hit by the pandemic will see long-lasting damage, with homes repossessed and tenants evicted.”
