Repossession rules mortgage lenders must follow
All mortgage lenders are regulated by the Financial Conduct Authority (FCA).
The FCA has rules about how lenders deal with their customers.
These are called the Mortgage Conduct of Business (MCOB) rules.
Most banks and building societies have also signed the FCA's mortgage charter.
They have agreed not to force people to leave their home within a year of their first missed payment unless there are exceptional circumstances.
Your lender must treat you fairly. They must consider any suggestions you make to deal with payment problems and arrears.
Your lender should only start court action to repossess your home as a last resort.
Alternatives to repossession
With your agreement the lender should consider whether to:
delay interest payments
extend your mortgage term
change the type of mortgage you have
add the arrears onto your total mortgage debt
They should allow you time to sell your home if you cannot come to a repayment arrangement.
They must keep records of their contact with you including phone calls where arrears or charges are discussed.
What your lender must do before court action
Your lender must provide you with the following information:
a list of missed payments
outstanding mortgage debt
total amount of arrears and charges
They must inform you that they are starting repossession action and tell you to contact the council for homeless help.
If your lender does not follow these rules
Make a formal written complaint to your lender if they do not follow the MCOB rules or ignore the mortgage charter.
Complain to the Financial Ombudsman Service if you're unhappy with the response or you do not hear from your lender within 8 weeks.
The Financial Ombudsman can look at the way the lender has dealt with your case.
They might tell your lender to stop court action and come to a reasonable repayment arrangement out of court.
Court rules about repossession
The court has rules about what a lender should do before starting court action.
The rules are known as the pre-action protocol for mortgage arrears.
The lender has to show the court they have followed these rules.
Information from the lender
The lender must give you details of:
the amount of your arrears
payments over the past 2 years
interest or charges that will be added
monthly instalments and total mortgage debt
They should also give you this guide by Shelter and the Department for Levelling Up, Housing and Communities.
If you make a proposal to repay the arrears
Your lender must consider any repayment offer you suggest.
If they do not accept your proposal, they must write to you within 10 working days to explain why.
Keep to any agreement you do make. The lender must give you 15 working days' notice if they intend to go to court because you've broken the agreement.
If you've applied for benefits or other financial help
Your lender may delay court action if you're waiting for any of the following:
homelessness help from the council
mortgage protection payments from an insurance policy
They might not delay court action unless you can show that you:
are seeking debt advice
can meet any payments not covered by benefits or insurance
expect your finances to improve in the foreseeable future - for example, you've been offered a better paid job or you're taking in a lodger
If you're taking steps to sell your home
Your lender must consider delaying court action if you're taking steps to sell your home.
You need to:
show the property is on the market at a realistic price
provide the lender with an energy performance certificate and sale brochure
give permission for your estate agent and conveyancer to speak to your lender
If you've complained to the Financial Ombudsman
Your lender must consider delaying court action if you're waiting for the outcome of a complaint to the Financial Ombudsman.
If the lender goes ahead with court action before the ombudsman makes a decision, they must write to you and explain why.
If your lender starts court action
Your lender must write to you 5 working days before they start court action and explain why they are applying to court.
At the repossession hearing, they need to show that they've followed the rules in the pre-action protocol checklist.
The judge could adjourn the hearing if your lender has not followed the rules.
This means that the hearing is put back to a later date to give the lender time to comply.
Last updated: 30 June 2023
