As of spring 2023, the government will be providing over £10 million per annum of additional funding to housing legal aid. Those at risk of losing their home are being offered free legal advice to give them the best chance of keeping their property if they fall into financial troubles.
What is the Repossession Of A Property?
House repossession is the legal process whereby a mortgage lender or secured loan provider takes ownership of a home if a customer does not make repayments. For instance, those struggling to pay back their mortgage or a payday loan secured by their house could potentially face a lender taking away their home.
Lenders undertake court action to repossess a property as a last resort if their customer will not pay back their loans. If the lender is successful, the consumer will be evicted from their property and essentially be homeless. 950 mortgaged properties were repossessed in the first quarter of 2022 alone.
What is the Impact of the Repossession of A Property?
A repossession order can be extremely stressful as alongside risking losing your home, it can damage your credit score for years. This would make it incredibly difficult to be approved for a mortgage on another property.
Justine Gray, from consumer lender Dollar Hand, explained that “It is therefore essential to get in touch with your lender immediately if you are unable to pay back your mortgage or secured loan as they may be able to offer an alternative more flexible repayment plan.”
“The worst thing you can do is run away from the problem and ignore your lender as they may get the courts involved if they cannot get through to you. Communication is key as if you’re seen to be making a conscious effort to deal with your situation, lenders are much more likely to work with you to find a reasonable solution.”
How is the Government Trying To Prevent Repossession?
The Housing Possession Court Duty Scheme (HPCDS) has introduced reforms that mean that those facing repossession will receive free legal advice on housing before appearing in court. By helping those facing eviction at the earliest point, it may even avoid the need for court proceedings altogether. However, the HPCDS will also provide support on the day of their hearing if it does get to that stage. Those facing a repossession notice will be offered early legal advice on money, debt and welfare matters to help with the wider issues they are facing. This aims to support individuals to improve their finances and in turn keep their homes, bettering their life prospects.
Funding for a pilot solicitor training scheme to increase the number of lawyers available to offer this vital service has also been arranged. The government is confident that they are putting in a lot of effort to try to rectify this issue.
How Can Homeowners Prevent Repossession Without Government Intervention?
Homeowners facing repossession have options available to attempt to avoid eviction. Since the repossession process is long, there is time to try to come to an agreement with your lender. This could be by finding an amount that you are both happy to pay each month towards your mortgage.
A last resort could be selling your house and paying back your mortgage in full. You could then use the remaining equity to either buy a smaller property or rent until you’re in a better position to purchase again. This would prevent the repossession and the negative implications of it.
Homeowners who are struggling to manage repayments can certainly get in touch with the HPCDS who will be sure to help.
