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Property repossessions banned until the New Year

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Written by: Emma Lunn
03/11/2020
The Financial Conduct Authority (FCA) says no homeowner will have their property repossessed until at least 31 January 2021.

The pledge is part of a package of new proposals for homeowners whose financial situation has been affected by coronavirus.

The regulator is also proposing to extend the availability of mortgage payment holidays.

In September, the regulator said that after 31 October borrowers would be offered ‘tailored support’, which it would keep under review as the pandemic evolved.

But as a result of increasing restrictions announced in recent weeks, and the second lockdown which starts on Thursday, the FCA is now proposing to enhance these measures.

What are the FCA’s proposals?

The FCA plans to extend the availability of mortgage payment holidays.

This will mean that:

  • those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total
  • those who currently have an initial payment deferral, will be eligible for another payment deferral of up to three months
  • those who have resumed repayments after an initial payment deferral will be eligible for another payment deferral of up to three months

The FCA says it’s important that borrowers who can afford to make repayments continue to do so.

Under the FCA’s proposals, borrowers would have until 31 January 2021 to request a payment deferral.

A payment deferral under these proposals would not be reported as missed payments on a borrower’s credit file.

However, this doesn’t mean that consumers’ ability to access credit will be unaffected in future, as lenders may take into account a range of information when making lending decisions.

The FCA is also proposing that no one will have their home repossessed without their agreement until after 31 January 2021.

Are you eligible for a mortgage payment holiday?

Under the FCA’s proposals, some borrowers would not be eligible for a payment deferral, including because they:

  • have already had two payment deferrals (of up to six months in total), and tailored support will be more appropriate to their circumstances
  • have agreed alternative support with their lender

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “We are working with lenders to ensure enhanced support remains available to borrowers struggling financially following changes in the coronavirus situation across the UK.

“Tailored support will still be offered and remains the most appropriate option for many borrowers, but we are proposing to extend payment deferrals for additional support. We also want to make sure no one has their home repossessed during this time.

“It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so. This allows support to be targeted to those most in need.

“We are also asking borrowers not to contact their lender yet, and instead wait for further updates, including from their lenders, soon.”

Eric Leenders, managing director of personal finance at UK Finance, said: “Lenders are continuing to provide unprecedented levels of support to help customers through the Covid-19 crisis and have been working closely with the FCA to ensure that customers impacted by the new lockdown measures will be able to access the assistance they need, including being able to defer payments on their mortgages where this can help.”

The FCA is asking for comment on the proposals by 10am on Thursday 5 November, with the final guidance published as soon as possible after the comment period closes.

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