Banks and landlords in England and Wales are taking record numbers of households to court to repossess their homes. This increase has hit a five-year high. The rise in repossession claims should serve as a reminder of the continued economic strain experienced by so many. Soaring mortgage repayments have slashed living standards everywhere in the UK.
In London, the crisis is even more acute. It has consistently seen the highest complaint rate on mortgage and private landlord possessions. Of the boroughs, Newham is the loudest global capital, appearing in the top ten for both avenues of complaint. Landlord possession claims rose by 9% YoY. The latest data find 24,495 claims in the system, close to or at record highs since 2019.
Possession claims haven’t just risen. They have eclipsed their previous high. This is much lower than the peak index of 26,419 recorded claims in the second quarter of 2009. Recent claims are in sharp contrast to when regulators released the guidance. The purpose of this guidance was to stop all possession proceedings during the height of the pandemic. On 5 August 2022, the Bank of England’s Monetary Policy Committee voted to lower interest rates from 5.25% to 5%. This strategic repositioning will greatly reduce economic stress for borrowers.
Borrowers have faced billions of pounds in additional mortgage repayments due to a series of rate increases by the Bank of England. The since 2000 increase in costs has put an incredible burden on people’s finances. As such, the UK economy slid into recession last year. As a response to these challenges, Britain’s largest banks have agreed to offer 12-month grace periods to assist struggling mortgage holders during the ongoing cost of living crisis.
The toll of these worsening economic factors can certainly be seen in the recent national homeless counts. In England, assessments of statutory homelessness shot up to 94,560 in the first quarter of 2024. This is an extraordinary 10.8% jump over this time last year. This increase reflects the deepening burdens that low-income families experience as they struggle to keep a roof over their heads.
“As expected, arrears are slowly increasing, but the actual repossessions are still very low compared to historical standards, which is mostly the result of active servicing done by the banks who are now, more than historically, working with their borrowers to bring them back on track.” – Aza Teeuwen, portfolio manager at TwentyFour Income Fund.