Scottish Government needs to act to Protect Homeowners

Scottish Government needs to act to Protect Homeowners

If the Scottish Government are considering extending the Protections that were introduced by the Coronavirus (Scotland) Act 2020 beyond the 30th of September 2021, they should do what they failed to do last time and increase protections for Scottish Homeowners.

Throughout the Coronavirus Crisis, the plight of tenants has attracted more attention than that of Homeowners, to the extent you would be forgiven for believing there is no risk to homeowners or a greater risk for tenants.

However, this is not the case, and arguably, the risk to homeowners is greater now than it is for tenants.

Homeowners lack a Safety Net

Like tenants, homeowners are at the same risk of experiencing income shocks and have been as likely to have been furloughed, or made unemployed.

Also contrary to popular perceptions, the vast majority have no more financial security or stability than many tenants do. In addition to that, the safety net that is the UK Welfare State, barely exists for them.

Homeowners, do not have the same level of protections as Tenants: they cannot claim Housing Benefit or their Housing Costs when they claim Universal Credit. Discretionary Housing Payments, a discretionary benefit paid by local authorities, to help with housing costs, is not available to them; and the Scottish Government’s Tenants Support Hardship Fund, is only, as the name suggests, for Tenants.

The only UK benefit that exists for them is the Support for Mortgage Interest Payments Scheme, which you would struggle to call a benefit anymore.

Support for Mortgage Interest (SMI)

Since the last crisis (the Credit Crunch) the benefits of SMI have now been eroded under 11 years of Conservative Government, with the waiting time before someone can claim now being 39, rather than 13, weeks; in addition to that, whereas the payments received were previously a benefit, they are now effectively a loan secured over your home.

In addition to that, SMI does not even pay all of someone’s mortgage, but only interest up to the first 2.09% on mortgages up to £200,000.

Now for those who are in a position to have been able to benefit from historically low interest rates, 2.09% may seem more than sufficient, but this fails to acknowledge that across the UK there are millions trapped in higher rate mortgages, where the finance company’s standard variable rate is sometimes as high as 4-5%.

For those with those higher-level mortgages, or higher interest rates, the Scheme will not even pay the interest on their loans.

Coronavirus (Scotland) Act 2020

Now during this Crisis, unlike the last one, homeowners do appear to have been overlooked.

Last time around, there were working groups set up, Pre-Action Requirements were introduced through the Homeowners and Debtor Protection (Scotland) Act 2010, the Scottish Government’s Homeowners Support Fund was refreshed, with a Shared Equity Scheme introduced to compliment the existing Mortgage to Rent Scheme.

However, this time around, homeowners, appear to have been overlooked by the Scottish Government when drafting the  emergency legislation that was laid before the Scottish Parliament. Like with tenants, no eviction or repossession ban was introduced until December 2020; but in April 2020, tenants got the additional protection of landlords (both social and private) being required to give them 6 months’ notice before they raised court action against them.

Homeowners got no such protection and still don’t have any similar protection, despite it being within the legislative authority of the Scottish Parliament to require Mortgage providers to serve a 6 months, rather than 2 months calling up notice on homeowners before raising legal action.

The piece of legislation that governs this area of law is the Conveyancing and Feudal Reform (Scotland) Act 1970 and it is wholly with the legislative powers of the Scottish Parliament to amend it.

We cannot just rely on Lender Forbearance.

The reasons why Homeowners were overlooked when this emergency legislation was introduced, is not exactly clear. Possibly the thought of Homeowners losing their home did not occur to the Scottish Government.

However, it is also true at the time when Lockdown began, the UK Financial Conduct Authority was quick to act and issued guidance to all UK banks that anyone affected by Covid 19 should be offered a 3-month payment break. Some were then offered additional payment breaks. 

However, as we now enter the 14 month of this crisis, lender’s forbearance is wearing thin and we must remember that although many  were offered payment breaks, lenders on the whole did not freeze interest and charges on their loans. Also when people do begin making payments again, many lenders want higher monthly payments to catch up on missed payments.

For those who are continuing to struggle and who may still be affected financially by Covid, the risks that a lender may issue a calling up notice and raise a repossession action within 2 months is now a real danger and will only grow.

This risk can only increase as we come out of this public health crisis and the support schemes that were put in place, such as the Furlough and Self-employed Income Support Schemes are withdrawn. We will not know what the medium to long term effects are of this until March 2023, at the earliest.

Unemployment may increase and people may be forced to accept reduced hours of work or lower rates of pay as businesses look to recover. Against that background those that are struggling to get by will have pretty much no benefit system available to support them with their housing costs. 

It, therefore, seems inevitable that the Scottish Government will have to consider extending many of the protections in the Coronavirus (Scotland) Act 2020 for tenants and consumers to the beginning of 2023 or even longer. If they do, then they need to also think about placing homeowners on an equal footing with tenants and requiring any calling up notice to give 6, rather than 2 months notice of any intended legal action. 


Evictions beginning again across Scotland

Evictions beginning again across Scotland

As the majority of Scotland, from the 17th May, moves into Tier 2 under the Coronavirus Regulations, there is much to be rejoicing about. Being able to enjoy a pint in your local pub for one, without having to shield under the cover of a weather shredded canopy. Unfortunately, Scotland in May is not the best weather to be enjoying a pint in a garden. Nor is it the best time to be losing your home, if there ever is a best time. 

For some, however, that is what the ending of Lockdown will mean for them. Not the ending of worry and stress, but just the beginning of it.

We are not yet out this Coronavirus Crisis and although most of the emergency rules that were put in place to protect people and businesses will remain in force until the 30th September, the ones protecting tenants and homeowners from eviction and repossession are not amongst them.

Instead, from the 17th May, any area of Scotland that slips into Tier 2 will also see the ban on evictions also being withdrawn, including Glasgow, which is borderline Tier 3, but is still going into Tier 2, despite the First Minister saying she is concerned. [A last minute decision on Friday, 14th May now means Glasgow will remain in Tier 3 for the next week at least].

What Protections do Tenants have?

There will remain some protections for tenants, however. Landlords will still be required to serve 6-month Notices to Leave (private landlords) and Notice of Intentions to Raise Proceedings (Social Registered Landlords) before they begin any legal action. 

These must be served when your Landlord wants to evict you and take you to the First Tier Tribunal for Scotland (Housing and Property Chamber) (private landlords) or the Sheriff Court (social landlords). These protections will remain in place until the 30th September 2021. Previously landlords only had to give you 28 days’ notice, but these were temporarily extended due to Covid 19 (there are exceptions when your landlord wants to evict you for anti-social behaviour or if you have committed a criminal offence).

However, where your landlord has already served one of these notices on you and the six months has expired, if they now take you to the Tribunal or Court and obtain a Court Order, they will after the 17th May be able to begin eviction proceedings.

Where they have already obtained an Order allowing them to evict you, and your area moves into Tier 2 they may now be able to evict you.

What Protections do Homeowners have?

When a secured lender or mortgage provider wants to repossess your home, they must first serve on you a Calling Up Notice that gives you 2 months’ notice before they can take you to court and request the court provides them with an Order allowing them to repossess your home.

Once they take you to Court, however, and obtain an order, the procedure for removing you from your home is the same as it is for a Tenant.

What is the Procedure for Evicting you or Repossessing your Home?

If a Landlord or Mortgage provider wants to evict you, they must first serve on you a Charge for Removing, served by a Sheriff Officer, ordering you to leave the property. This must give you 14 days’ notice.

If you have still not left the property after those 14 days, the Landlord or Mortgage Provider must then arrange a Sheriff Officer to send to you a Notice of Removal, which must give you at least 48 hours’ notice of the day and time that the Sheriff Officer will attend your home and remove you.

What can you do to Prevent a Repossession or Eviction?

The most important thing you can do is seek advice as soon as you begin experiencing financial difficulties. However, even if you leave it to later, it is never too late to seek advice.

So that means even after a Notice from your Landlord indicating they want to take you to Court or a Notice from your Mortgage Provider telling you that they are calling up your Mortgage.

Ideally, you want advice and representation before your case is heard by the First Tier Tribunal or the Sheriff Court. It is in your best interest to be represented at that hearing. 

However, even if you have done nothing and a court order has been granted against you and a Charge for Removal, and even a Notice of Removal has been served, you may still be able to stop the eviction or repossession right up to the point before the Sheriff Officers remove you from your home.

Minute of Recall

Minutes of Recall are legal remedies that you can use up to the point before you are removed from your home. They can be granted if you were not represented at the Tribunal or Court Hearing, but can be complex, so you should seek advice from a solicitor or your local advice agency as soon as possible.

How Long do Court Order for Eviction and Repossessions Last?

When a Court or Tribunal grants an Order for your eviction or the repossession of your home, it normally has two parts. The first part allows the Landlord or Mortgage Provider to remove you; the other part is the part where they seek money, such as for rent arrears or your mortgage.

Normally, Landlords and Mortgage providers will seek to evict or repossess your home shortly after receiving the court order, using the above procedure.

However, in the case of Tenants, with Social Landlords, the Landlord, when the case involves rent arrears, must use the eviction part within 6 months of getting the Court Order (sometimes the Court can set a shorter period). However, under emergency Coronavirus Laws, they may get longer as the rules governing the eviction ban suspended the running of this 6-month period. This means where the Landlord got an eviction notice one month before the eviction ban, when it ends, he will still have another five months to use it, even though the eviction ban was first introduced in December 2020.

This means many Social Landlords in rent arrears cases, may be able to use Court Orders that, under normal conditions, would have been too old. 


Realistic Advice Strategy for Covid 19 Required

Realistic Advice Strategy for Covid 19 Required

Realistic Advice Strategy for Covid 19 Required

Covid 19 has exploded like a hand grenade in every home and workplace across our Society.

No-one feels safe. Any complacency we had only weeks ago is now gone.

We are now all facing a real, tangible threat to our health and well-being and that of our friends and loved ones.

Two Contagions

However, there are two contagions ripping through our communities at the moment.

First, there is the Covid 19 contagion, which is a serious threat to public health, the likes of which has never been seen since 1918. It will push our National Health Service to breaking point and every day we see health sector workers take the type of life threatening risks that they never signed up for: of going to work and not coming home.

Despite that, our Doctors, Nurses, Auxiliaries, Porters and Cleaners are on the front line, daily risking everything, including not being able to return to see their own children and families, so ours can be safe   There can be no question, that after this, we will all be indebted to them.

However, there is also a second contagion ripping through our Society, the contagion of financial failure and that threatens to be deeper and more enduring than the financial crisis that we witnessed in 2008.

Within weeks of the lock down millions have already been affected, with almost one million having to claim Universal Credit.

As staggering as these figure are, they don’t take into account those working poor that were already claiming it and because of falling income, will now see their claims rise. It doesn’t take into consideration those that are now eligible to claim, but through a lack of familiarity with the benefit system, have still not done so; or those only claiming contribution based Job Seekers Allowance and Employment Support Allowance or Statutory Sick Pay.  Nor does it take account of the hundreds of thousands that will have to claim it in the weeks and months ahead.

Hopes that in three months time, the lock down will be lifted and gradually we will all return to some form of normality and these people will return to paying their mortgages and credit cards and loans, are as unrealistic and complacent as were our attitude to Covid 19 two weeks ago.

This will not happen, despite the payment breaks (where interest and charges are still being applied), despite the standing down of Sheriff Officers and debt collectors, despite the amnesty on evictions, despite the furlough payments of 80% of employees wages and the earnings of the self-employed, which won’t even arrive to June.

A New Strategy for Helping People will be Necessary

How long we will be required to address this second crisis, the financial crisis, will have to counted in years, not months. 

This will be necessary for a  number of reasons.

First there is the scale of the problem: it will be huge and complex and the advice sector in terms of money advice simply just doesn’t have the capacity to tackle that problem.

This was the case before this crisis with the Improvement Service reporting that local authority funding for free money advice had been cut by over 45% since 2014; and the Money Advice Service (the predecessor to the Money and Pension Service) reporting that Scotland was already 50% under capacity before this crisis even began.

What that percentage will be after this crisis is anyone’s guess.

Problem Debt Route Map Without Direction

Second, Scotland doesn’t have any strategy for dealing with Problem debt.

In January 2019, money that is raised by the Financial Conduct Authority from banks to fund the free money advice sector, The Debt Advice Levy, was devolved to the Scottish Government. 

A Tackling Problem Debt Working Group was established to come up with a Debt Advice Route Map.  The problem was, as I have previously wrote about (Route Map Without Direction) the subsequent Route Map that was produced, lacked any direction, because I suspect, as is common and understandable in a sector where funding is scarce, many of those who sat on the Group approached it with the attitude of what was in it for their respective organisations, rather that what was strategically best for  Scotland as a whole.

This was evidenced only months ago, when a decision was taken to just  renew all funding grants, most of which had been awarded prior to the funding being devolved.

A Divided Sector

Thirdly, if I was to be honest, as a Sector, the money advice sector don’t work well together. I say this as one of the few advisers who has worked for the public sector, the third sector and the private sector. 

The Third Sector don’t trust the Public Sector to give them any funding; the Public Sector fear the continued encroachment by the Third Sector, staffed by lower paid advisers and unpaid volunteers, who are often viewed as a cheaper option by funders; and neither trust the Private Sector, despite the fact they provide access to more formal debt solutions than the other two together. If any evidence is required of this, one only needs to look at the recent evidence gathering sessions by the Economy, Energy and Fair Work Committee of the Scottish Parliament in relation to Protected Trust Deeds. That descended into nothing more than private sector bashing eventually.

This is not to say that rivalry exists between front line advisers across the three sectors. The truth is, there is actually a strong level of solidarity between front line advisers, regardless of the sector they work in, as they are all doing the same job and face the same challenges.

The problem is, however, although it is true there is no shortage of work for all, there is a lack of funding, which doesn’t cultivate joined up working at a higher level in all sectors.

Scottish Government’s Response is Not Joined up

This lack of strategy will now be a problem, as will this lack of joined up working.

Quite simply if many of the protections that we have seen rushed in over the last few weeks are then rolled back over the next 3-6 months, the demand for free advice will overwhelm  the free money advice sector in Scotland.

There is clearly a lack of understanding of this problem in the Scottish Government who have already, in the middle of a lock down began directing people to Citizen Advice Bureaux, a primarily face to face service, through social media advertisements, like the one below.

This is wrong on so many levels.

First, all Citizen Advice Bureaux should be closed. We are all on lock down. If any are still open, they should be closed. The advice sector exists to help people and many of our clients are the most vulnerable in Society, often with serious underlying health problems. No advice agency should have their doors open. What we do is key, but in the context of this Crisis, it is not on the whole, life saving.

Secondly, although I am sure every Citizen Advice Bureau in Scotland is scrambling to put remote working in place, like every other advice agency, and offering services like telephone services from home, few of us were set up for this and we are all scrambling to adapt to the situation we are now in.

It is not an easy process.

Thirdly, to direct everyone down the one channel, when much of the advice capacity in this country doesn’t exist solely in Citizen Advice Bureaux, but across the sector as a whole, which includes Local Authority Money Advice Agencies, private sector insolvency firms, and national debt charities is ridiculous. Basically this is the recipe for creating a bottle kneck, that will quickly become choked and lead to many not being able to obtain the advice and support they need.

What would be more sensible would be for the Scottish Government to contact all local authorities and request they post prominently on their websites what local services are available for people (and most will anyway), with links and contact details.

These pages should also contain details of national websites and telephone helplines (most of which are partly funded by the Scottish Government anyway). The Scottish Government could then direct people to visit their local authority websites for information on what local services are available to them, which would contain details of Citizen Advice Bureaux, but also local authorities services, law centres, housing associations, foodbanks etc.

It’s clear to me this marketing campaign is more about the Scottish Government being seen to be doing something, rather than actually doing anything. It’s cover for the fact the Money Advice sector is in a very poor way.

It ignores the limited resources and challenges that all advice agencies are currently facing and does not even attempt to take a joined up approach to helping people.

A Strategy for Tomorrow

In the medium to long term, we need to now start thinking of a strategy for how we are going to deal with the problem that is coming down the line in a matter of months. The likliehood is, when the lock down is over, significant numbers of people are going to be traumatised.

Mental health problems will have increased, debts will have built up, households which previously survived on earned income will be workless and struggling with mortgages and problem debts.

Some will be struggling with bereavements.

The idea that this can be tackled with an army of volunteers, based on David Cameron’s Big Society, has to be shelved alongside the ideas of austerity.

The reality is most Citizen Advice Bureaux, like all advice agencies need more full-time paid, specialist staff to deal with the complexity that is the modern day benefit and debt advice sector we work in.

Don’t tell me we can’t afford it.

This is not the post war Britain that the Citizen Advice Movement was born into and their advisers have to be paid a wage that is commensurate with the level of expertise and skill they are expected to have and the level of responsibility they are expected to shoulder. They shouldn’t have to be claiming benefits and worrying about how they pay their mortgage as they help others do so.

We also need a more joined up approach between advice agencies, including the private sector. The truth is if you want to add capacity quickly, then private sector firms and national charities like Stepchange can help us do that quickly and recent changes to the Debt Arrangement Scheme, banning private management fees, will allow that to happen without the client suffering a detriment.

Equally, however, there will be huge numbers of people whose issues will be that complex, as will their wider needs, that face to face money advice services will need to work in partnership with other local support agencies, such as welfare rights, mental health, addiction and family support services. These will be required in greater numbers than before.

We need to be doing this now, as from experience I can say that skilled money advice workers can take between 18-24 months to train and we have lost a lot of that experience after ten years of austerity and cuts and don’t have that amount of time.

Maybe we could even ask some of those advisers that left if they will return to help us with what lies ahead.