Eviction Ban: How to use it to your Benefit

Eviction Ban: How to use it to your Benefit

The Scottish Government’s decision to extend its eviction and repossession ban has thrown a lifeline to many Scots and their families.

However, although the Scottish Government has said they have an option of extending the ban beyond the 31st March 2021, people should not assume they will and should use this time to take steps to help themselves.

In this post we look at what tenants and homeowners can do to help themselves. 

Episode Two: The Scottish Tenancy Hardship Loan Fund

Get Advice

The most important thing you can do if you have mortgage or rent or mortgage arrears is get advice.

The second most important thing you can do is speak to your Landlord or Mortgage providers. They may be able to help you.

In terms of Landlords, it is in their interest to help you. Currently the law states that if they want to evict you, they must first give you six month notice before they even initiate legal action. Even if they have done that and obtained an order to evict you, the eviction ban means they currently cannot remove you from the property. The most effective way for them to get their money, therefore, is to work with you.

Also, Mortgage Providers have been told by they UK Financial Regulator, the Financial Conduct Authority, that they must work with home owners and where it is required give them support.

If you don’t feel able to do this or you need help claiming benefits, then contacting your local advice agency is important as they can assist you.

Maximise your Income

If you have been affected by the Covid 19 Crisis fiancially, then you may be entitled to financial assistance from the UK Government.

This may come in the form of the UK Furlough Scheme (speak to your employer) or the Self-Employed Income Support Scheme 

Also you may be entitled to additional social security benefits such as Universal Credit and help with your housing costs.

Unfortunately, you cannot get help with your mortgage through Universal Credit, but there is some support in the form of a secured loan available through the UK Government’s Support for Mortgage Interest Scheme (although you do need to wait 39 weeks before that support becomes available).

The most important thing you can, therefore, is look at how you can maximise your income. 

One way of doing this, is by completing a full benefit check for yourself.

Discretionary Housing Payment

If you are a tenant and you are having difficulty paying your rent, you may be entitled to a Discretionary Housing Payment.

A Discretionary Housing Payment is a payment that your Local Authority can pay to you or your Landlord to help you with your rent.

These payments can be in addition to other payments to help you with your housing costs, such as through Universal Credit.

They cannot be use to pay rent arrears, however, where you cannot pay your full rent because Universal Credit won’t cover the full cost, or you have been affected by the Benefit Cap, or your income has dropped, DHPs can be awarded to make up the difference.

They can also be backdated, so they may reduce your rent arrears.

If you are interested in applying for a Discretionary Housing Payment, you should contact your Local Authority.

What is Changing with the Debt Arrangement Scheme

Scottish Welfare Fund

All of Scotland’s Local Authorities can provide people with non-repayable grants through the Scottish Welfare Fund.

The types of grants that are available are Crisis Grants and Community Care Grants.

Non of these can be awarded to help pay rent or mortgage costs, however, they can be provided for other reasons if you are struggling financially and this may help you with other costs.

Crisis Grants can be paid to help you with your day to day living costs if you are experiencing any financial hardship and are intended to pay for essential living costs such as food and ensuring you home is heated.

Community Care Grants can be paid to cover the cost of larger items that need replaced, and are essential, such as beds, flooring, curtains and cookers.

If you want to apply to the Scottish Welfare Fund, you should contact your local authority.

rent arrears

Tenancy Support Hardship Fund

The Tenancy Support Hardship Fund should be the last option you should explore if you have rent arrears.

This is because it means borrowing from the Scottish Government a loan to pay your rent arrears, that you then must repay.

However, the Loan is interest free and does not need to be repaid immediately. Once you have borrowed from it, you don’t need to make any payments for the six months.

After that you have up to five years to repay the loan.

In addition to that if you are financially struggling to repay the loan, you cannot be evicted, unlike if you don’t repay your rent.

The Tenancy Support Hardship Fund can only cover rent arrears that have been accrued since the 1st of January 2020.

If you want to apply to the Tenancy Support Hardship Fund, you do online via a Scottish Government Webpage.

Once the sequestration is awarded by the Accountant in Bankruptcy, or by the Court (where a creditor makes you bankrupt), the Trustee notifies the creditor and the wage arrestment should cease.

Rent Arrears

Dealing with Rent Arrears

If you are experiencing difficulty with your rent arrears, our page on Rent Arrears and how to deal with them will provide you with more information.

Dealing with Mortgage Arrears

Our page on Mortgage Arrears also explains the process that mortgage providers must use when you get into mortgage arrears and tell you what your rights are. For more information, click below.

Homeowners Not Receiving Regulated Advice

It has been revealed homeowners in receipt of Support for Mortgage Interest (SMI), who are being contacted about accepting Government loans that will replace the SMI benefit scheme in April, are being referred to advice agencies that cannot give them advice.

The revelation comes after Margaret Greenwood (MP) submitted a written question to the UK Government:

To ask the Secretary of State for Work and Pensions, which organisations Serco signposts Support for Mortgage Interest claimants to for advice on deciding whether to take out a loan from her Department to replace the benefit they are currently receiving; and whether such organisations are able to offer financial advice on taking out a loan.

Kit Malthouse, Parliamentary Under-Secretary (Department for Work and Pensions) responded:

All existing recipients of Support for Mortgage Interest will be contacted and given information about the changes. The information leaflet and Frequently Asked Questions booklet point claimants to organisations who can offer impartial, free support. These include Money Advice Service, Shelter and Citizens Advice Bureau. These organisations do not offer regulated financial advice, however they can support claimants to understand the options available to them.

For more information on the new loan scheme, see here

The Home Owning Betrayal: Support for Mortgage Interest

The Home Owning Betrayal: Support for Mortgage Interest

After the home ownership revolution of the 1980s and 1990s, when millions of tenants were sold the dream of owning their own home, the UK Government is now rolling out the final chapter in that dream for many. The proposed changes to the Support for Mortgage Interest Scheme reads like an original Grimm Brothers fairy tale. Once you’ve read the contents of the new plan, it’s a bit hard to believe it’s appropriate for its intended audience.

Make no bones about it, the new dream is a cruel and barbaric one, which discriminates against the most vulnerable households, many of which have been at the blunt end of welfare reform for the last 8 years.

From the 6th April 2018, those households currently in receipt of what is known as Support for Mortgage Interest (SMI) are being presented with a choice, if they want to continue to have the support, they must accept it will be in the form of an interest-bearing, secured loan. Alternatively, they need to work out themselves how they are going to keep the roof over their head.

Support for Mortgage Interest (SMI)

The Support for Mortgage Interest Scheme was introduced in 1948 by the Clement Atlee Government. It extended housing cost assistance to home-owners like housing benefit provided support for tenants for periods of unemployment, illness, or eventual retirement.

In its current form, to claim the benefit you must be in receipt of a qualifying benefit and it is only payable after 39 weeks (which is intended to encourage homeowners to save or take out payment protection insurance – in the case of those who are in receipt of pension credit, they become entitled immediately). It also only pays the first 2.6% of any monthly interest payment for loans up to £200,000 (or £100,000 where someone is a pensioner). Where interest rates are higher, the homeowner must make up the shortfall and nothing is contributed to the capital repayment of the mortgage.

The new scheme, it is argued, is necessary, as the current £205 million costs are unsustainable. This is even though people can still have their mortgage interest paid if they sign up to it and the Government will not save any money immediately. Also, if you consider the amounts involved, the current costs are less than 5% of what is being spent throughout the UK in other housing benefits.

It has also been argued, it is only fair, as otherwise people and their families will benefit from rising equity in their property and this will be at the expense of the taxpayer (obviously not a concern for many Members of Parliament who buy properties then rent them to other MPs at the expense of the taxpayer).

However, the truth is no-one has ever had their mortgage or home loans paid off by SMI (although plenty of private landlords do get theirs paid via Local Housing Allowance). Also, a significant number of those involved are pensioners and many are already facing other problems such as they still only have interest only or partial repayment mortgages, which means even when their mortgages mature, they will still be left with a substantial shortfall (one in five UK mortgages are currently believed to be interest only or on a partial repayment basis).

In addition to this, there are now rising concerns that the effect of the new scheme will be many households will not sign up, fearful they will get into more debt and will end up in arrears.

A recent freedom of information request by mutual insurer Royal London, found of the 124,000 currently receiving support, only 6,850 homeowners had signed up. As a result, they have called for the UK Government to delay the roll out of the Scheme.

The real fear is the Government will scare off tens of thousands from applying for support and the price of this will be thousands going into arrears and facing repossession.

The Final Chapter in a Grimm Tale

The truth is this is a betrayal. The final chapter in the Grimm Brother fairy-tale of home ownership that successive conservative governments sold in the past.

For many the other chapters involved them being enticed into buying their council and housing association homes in the 1980s and 1990s, often inappropriately. Subsequent chapters involved them being sold interest only mortgages, with inappropriate endowment policies which were never going to adequately pay off the capital amounts owed at the end of the mortgage terms. Then there were the home development loans for new driveways, double-glazing and kitchens, all secured over their properties.

Then there were the mis-sold payment protection policies that people took out in the belief they would provide adequate insurance against unemployment and illness.

Finally, there was the over-arching theme of the story that if you worked hard, paid your taxes and national insurance contributions, then the welfare state would protect you later in life if misfortune fell upon you.

But it was all a fraud.

For many the dream has been a story of being mis-sold, poorly advised and over-indebted.

Just like the fraud the UK Government is telling us now that this new scheme is a way of saving UK taxpayers money. It won’t.

If people do lose their homes or feel they must sell them, then it’s likely we will all pay more when we are paying their housing benefits or local housing allowances.

If you are affected by the changes to the Support for Mortgage Interest Scheme, it is important you seek advice.

Contact the Scottish Financial Health Service or Citizen Advice Scotland.