Mortgage arrears possession process

Rules for bringing a possession claim and sending notices, filing a defence, and the court powers during the hearing.

This content applies to England & Wales

FCA ban on repossessions

In the updated Financial Conduct Authority guidance for firms, the FCA has stated that lenders should not apply for a warrant or writ of possession before 1 April 2021. The ban on repossessions does not prevent a mortgage lender from issuing a claim for possession or obtaining a possession order. Lenders are permitted to repossess properties with the express permission of the borrowers.

Complaints about lender's conduct

The Financial Ombudsman Service can deal with complaints about mortgage lenders who issue possession proceedings for arrears that have accrued as a result of coronavirus related difficulties. The Ombudsman can also deal with complaints about insurance policies that have not paid out when they should have, or if it becomes apparent that the policy was mis-sold. 

Coronavirus information for borrowers is available on the Ombudsman website.

Claim

When taking possession action in the courts, the lender must follow the procedure contained in Part 55 of the Civil Procedure Rules.

The claim should normally be brought in the County Court. 

The claim may be brought in the High Court in the case of:

  • complicated disputes of fact

  • points of law of general importance

  • claims against trespassers where there is a substantial risk of public disturbance or of serious and immediate harm to persons or property[1]

A claim form N5 will be issued by the County Court advising the borrower of the venue, date and time of the possession hearing.

The claim form must be accompanied by the particulars of claim on form N120 and must contain details of the:[2]

  • amount borrowed

  • amount of outstanding arrears

  • current mortgage balance

  • any other outstanding payments, for example interest or insurance

  • any information the lender has about the borrower's circumstances and welfare benefits claimed

The claim may be started online,[3] as long as certain conditions are met,[4] using the possession claims online service (PCOL).

Where the possession claim is started online, the lender may send particulars of the claim to the borrower within seven days of the claim being issued.[5]

Response

On receipt of the claim form, the borrower is not required to file an acknowledgment of service or defence, but their failure to do so may be taken into account when liability for costs is considered.[6]

Where the possession claim was started using PCOL, a defence or counterclaim may be filed using the same service. A username and password is issued to the borrower with the claim form.[7]

Witness statements should be filed and served at least two days before the hearing.[8]

Court hearing

At the possession hearing, the court will check if the parties have complied with the Pre-action Protocol for Possession Claims based on Mortgage Arrears and the Civil Procedure Rules and may:

Notices

Within five days of receiving notification of the hearing date from the court, the lender must send a notice stating that a possession claim has been started to all of the following:[9]

  • the property, addressed ‘the tenant or the occupier’

  • the housing department of the local authority within which the property is located

  • any registered proprietor of a charge over the property other than the lender claimant

The lender must produce a copy of the above notices and evidence that they have been sent at the hearing.[10]

The lender is also required to give notice to any person who has registered their interest in the property under the Matrimonial Homes Acts 1967 or 1983 or the Family Law Act 1996.[11]

Court’s powers

The court's powers to determine the claim on the day of the hearing are as follows:

  • dismissal if the arrears have been paid or for serious procedural errors

  • a possession order, which may be outright or suspended on terms

  • a time order, particularly if the loan was regulated by the Consumer Credit Act 1974 when it was executed and potentially in other cases

  • a money judgment if the lender ask for judgment for the arrears at the same time as the possession order

  • postpone the date for possession for up to two months where there are unauthorised tenants in the property, whose tenancy is not binding on the lender[12]

The court may not be able to determine the claim on the day of the initial hearing. The powers to adjourn are as follows:

  • a procedural adjournment if the lender has failed to provide all required information or give notice to occupiers

  • an adjournment under the Administration of Justice Acts for the borrower to pay the arrears over a reasonable period[13]

Where the borrower has a substantive defence to the claim the court may provide case management directions. The court will instruct the lender and the borrower to file documents and will set a date for a trial. A defence may be established by someone other than the borrower but who has an interest in the property that is effective against the lender. It may be necessary for the court to add any such person as a party to the action. This does not include tenants of the borrower unless their tenancy is binding on the lender

A mortgage possession case may return to court for further hearings, for example to resolve procedural difficulties, or upon the lender application where the borrower has failed to keep to the terms of an adjournment, suspension or stay.

Enforcement

If possession is given outright, or the terms of a suspended possession order are not complied with, the lender can apply:

Warrants and writs of possession are enforced by accredited Enforcement Agents (bailiffs).

Coronavirus guidance

HM Courts & Tribunals Service has published guidance for those attending court or tribunal hearings during the coronavirus (Covid-19) outbreak. The guidance will be updated when new advice is available.

Last updated: 22 March 2021

Footnotes

  • [1]

    Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55.1.1 - 55.1.4 and 55.1.6.

  • [2]

    Civil Procedure Rules SI 1998/3132 (as amended). Practice Direction 55.2.1, 55.2.5, 55.5.1 and 55.5.2.

  • [3]

    Rule 55.10A Civil Procedure Rules SI 1998/3132 (as amended).

  • [4]

    See Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55b.5.1 - 55b.5.2.

  • [5]

    Civil Procedure Rules SI 1998/3132 (as amended). Practice Direction 55b.6.3A - 55b.6.3C.

  • [6]

    Rule 55.7 Civil Procedure Rules SI 1998/3132 (as amended).

  • [7]

    Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55b.7.1.

  • [8]

    Rule 55.8(4) Civil Procedure Rules SI 1998/3132 (as amended).

  • [9]

    Rule 55.10(2) Civil Procedure Rules SI 1998/3132 (as amended).

  • [10]

    Rule 55.10(4) Civil Procedure Rules SI 1998/3132 (as amended).

  • [11]

    Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55.2.5(1).

  • [12]

    s.1 Mortgage Repossessions (Protection of Tenants etc) Act 2010 and Civil Procedure Rules, rule 55.10(4A).

  • [13]

    s.36(1) Administration of Justice Act 1970.