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Repossessions could start up again from April

Christina Hoghton
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Christina Hoghton

Repossessions have been banned during much of the pandemic but they could be set to resume in less than a month’s time

Lenders should be able to go ahead with repossessions subject to any government restrictions from 1 April, the Financial Conduct Authority (FCA) has proposed.

The FCA said: “We recognise that repossessions can be difficult and stressful but delaying repossession can lead to poor customer outcomes as a result of increased balances and equity erosion. This is why we propose to allow firms to repossess homes when it is fair and reasonable to do so.”

The regulator added that repossessions should be a last resort and borrowers were still entitled to tailored forbearance if needed.

Lender forbearance

The FCA said firms should continue to act in accordance with regulations and only consider any payment deferrals as arrears once a mortgage holiday ends and the next payment is missed.

Lenders should also clearly communicate with customers to reach an agreement to repay any money owed on the mortgage before considering the seizure of a property.

Unless a customer is unreasonably refusing to respond to communication, a property should not be repossessed without a borrower’s consent solely because of a shortfall resulting from a payment holiday.

To ensure a repossession is fair and reasonable, lenders should consider whether the mortgage holder or a member of the household would be put at risk of coronavirus if they were evicted.

If a risk is identified, the repossession should not go ahead until it is deemed safe to do so. Also, tenants should not be asked to vacate a property during self-isolation.