Home repossessions will be allowed as a last resort' in April, the Financial Conduct Authority (FCA) has said.
Firms will be allowed to enforce repossessions from the 1st April "if all other reasonable attempts to resolve the position have failed," said the city regulator.
A freeze on repossessions has been in place since March 2020 and was extended in January 2021 as the second wave of the coronavirus forced the government to bring in lockdown measures.
Firms should consider the potential impacts on customers of possession proceedings carefully and consider whether it is appropriate to commence or pursue repossession proceedings, including taking possession, in a particular case at this time.Said the FCA
The draft guidance also cautioned companies against evictions where vulnerable people might be put at risk of contracting coronavirus. This could include people who have been shielding or who are in self-isolation due to having contracted the virus.
Potentially hundreds of thousands of households could be affected.
A report from the UK's Social Market Foundation, published in February, found that up to 800,000 households did not have enough savings to cover a single month's mortgage payment, making them vulnerable to repossession.
Nearly one in three reported that their savings had decreased since the start of the pandemic, while one quarter said they worked in the retail or hospitality sectors- some of the sectors hardest hit by COVID-19.
As part of its guidance, the FCA reminded homeowners that they could still apply for another payment deferral until 31st March- but warned them to think carefully about whether they need to take one.
A renewed payment deferral could extend homeowners' payment deadlines to 31st July at the latest.
Applications for deferrals are only open to those already with deferrals and not those newly affected by coronavirus.
People being impacted for a second time, or who are newly affected by coronavirus, should seek Tailored Support Guidance (TSG) from their mortgage provider, said the regulator.
The Payment Deferral Guidance enabled firms to deal with unprecedented demand for short-term support resulting from the pandemic. However, the demand for payment deferrals has reduced, and firms now have the capacity to offer both shorter and longer-term support. That support should provide better outcomes for consumers as it includes a wider range of options and is tailored to their individual needs.Said the FCA
TSG measures are subject to ordinary credit reporting, unlike many of the extraordinary measures introduced at the height of the pandemic to help people struggling financially.
The FCA invited firms to comment on its guidance before 10th March in order to finalise the rules before the eviction moratorium ends.
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