Shelter calls for new advice service to tackle rising repossessions
31 January 2008
Shelter has today called on the UK and Scottish Government to urgently develop a free, confidential advice service, to help the growing numbers of homeowners hit by mortgage arrears and repossession.
The call for the special arrears 'one stop shop' comes as figures show more than one million households could face repossessions over the next year and as the charity throws the spotlight on the problem of repossessions. New figures released by Shelter Scotland show a 42 per cent rise in traffic to the charity's web pages that provide advice on repossession , while the number of people applying as homeless because of mortgage default has risen by 14 per cent , and decrees for repossessions have risen 31 per cent in recent years .
James Jopling, Head of Campaigns, at Shelter Scotland, said: 'There is strong evidence to suggest that mortgage default and repossessions in Scotland are an increasing problem for many people. Even just seeing a 42 per cent increase in traffic to our website is an indicator people are already seeking help. With repossessions set to rise this year , we worry that, even though we provide advice online, on the phone and in person, that we haven't got the resources to help everyone.
'The UK and Scottish Governments, mortgage lenders and the Financial Services Authority must take responsibility and start repairing the broken state safety net to ensure that if people face difficulty, there is protection in place and somewhere to turn for advice.'
The service would provide early stage advice to people facing difficulty paying their mortgage through a telephone helpline and online support. In addition, mortgage lenders would be obligated to provide details of the service to all customers. The recommendation is part of a repossession action plan published today by Shelter. 
Other recommendations include:
- The Financial Services Authority (FSA) must clampdown on irresponsible sub-prime lenders who sell customers unaffordable products and are too quick to repossess properties from those in mortgage arrears. 
- The national mortgage rescue scheme in operation in Scotland, Mortgage to Rent should be better publicised and increased in scale.
- The quality of information on repossessions that is collected and published centrally in Scotland should be improved because in order to deal with the problem effectively we need to know its true scale and nature.
- The Scottish Government needs to push ahead with the implementation of Section 11 of the Homelessness etc (Scotland) Act 2003. This creates a duty for mortgage lenders to inform the local authority whenever they instigate repossession proceedings. 
- The UK and Scottish Government must urgently improve the current inadequate state safety net for homeowners, which allows too many to fall through the gaps. It should consider Joseph Rowntree Foundation's Sustainable Homeownership proposals (SHOP) as a first step forward. 
Commenting on the recommendations in Scotland, James Jopling added: 'Instead of helping struggling homeowners get back on their feet, the actions of some lenders, combined with a lack of government support, simply exacerbates their problems and condemns them to the despair and misery of losing their home.
'A free and impartial advice service is a much needed first step to stop mortgage arrears and repossessions escalating and help thousands of ordinary people keep a roof over their heads.'
Notes to Editors
- Copies of the full Mortgage and Repossessions briefing, which covers the UK, is available from the Shelter press office on 0207 505 2162, out of hours 07850 901 142. A short media briefing on repossession in Scotland is available from the media office in Scotland on 0844 515 2442 (connects to out of hours).
- Shelter statistics show, when comparing October to January 2006/7 and 2007/8, that the number of page views rose by 42 per cent year on year. Throughout 2007, Shelter Scotland's web pages that provide advice on repossession were viewed nearly 35,000 times.
- Scottish Government (2007) Operation of Homeless Persons Legislation: National and local authority analyses.
- Scottish Government. Note: Not all decrees that are granted result in repossession and that due to the concerns about the accuracy of this data there is a review of its collection currently being undertaken by the Scottish Government.
- The Council of Mortgage Lenders (CML) predicts that at the end of 2007, the number of repossessions in the UK will reach 30,000 (figures to be released February 8th 2008) and sharply rise to 45,000 in 2008. The figures are not broken down for Scotland.
- A recent FSA report into sub-prime lending practices showed one third of cases had not adequately assessed affordability of products for customers, and half had not assessed suitability. In addition, research by the CML implies that borrowers who fall into arrears in the sub-prime sector may be twice as likely to be repossessed as those borrowing from the mainstream sector.
- Under Section 11 of the Homelessness (Scotland) Act 2003, mortgage lenders would have to inform the local authority homeless persons department when they enter into possession action for mortgage arrears. This section of the Act has yet to be implemented.
- The current Income Support for Mortgage Interest (ISMI) scheme normally leaves borrowers with a shortfall between what ISMI will pay and what is owed. Borrowers can wait 39 weeks before the first payment is made. SHOP would replace ISMI and MPPI. For more information on SHOP go to www.jrf.org.uk