Debt-ridden homeowners given new repossession safeguards

Published on Thursday 11 February 2010 22:04

SAFEGUARDS aimed at protecting indebted homeowners from repossession became law last night in Holyrood.

The move came as official figures published yesterday showed that the number of people in the UK who have had their homes taken off them was at its highest in 14 years.

The Home Owner and Debtor Protection Bill, agreed by MSPs, is designed to make it more difficult for houses to be repossessed when homeowners fall into debt.

Housing minister Alex Neil said: "One of the most significant consequences of the economic recession, especially during the last year or so, is that too many Scots find themselves caught in a debt trap, putting family homes and families at risk.

"Our response embodied by this Bill has been to act quickly, well ahead of our colleagues south of the Border, in terms of legislation to introduce better protection for homeowners, not just in these difficult times but for the longer term."

Around 46,000 people had their homes repossessed last year, according to the Council of Mortgage Lenders (CML) – the highest level since 1995 and 15 per cent more than in 2008.

And the CML predicted 53,000 homes will be repossessed this year, with a further 205,000 people ending 2010 in arrears.

"Sadly the risks for such people will only intensify if either unemployment or interest rates go on rising," Mr Neil warned.

The legislation will improve protection for homeowners at each stage of the repossession process, with all cases now to be heard in court.

Lenders will also have to prove they have taken reasonable steps to avoid repossession.

The Bill said these "pre-action" requirements will give Scottish homeowners more protection than similar measures introduced in England and Wales where parties' "rights and obligations" were not changed.

Labour's Mary Mulligan claimed the Bill only came about because of pressure from her party and other groups after the government had "delayed" taking action.

The guidance and regulations issued with the Bill will be critical to make the legislation effective, she said.

"It will be essential to ensure that this Bill is working as soon as possible and I'm sure the minister will not delay further," she said.

Tory David McLetchie praised the good practice of the "overwhelming majority" of lenders in dealing with homeowners who fell behind with repayments.

"All the evidence taken on the Bill demonstrated that customers in arrears with their mortgages were treated with sensitivity, as a matter of corporate social responsibility."

Liberal Democrat MSP Jim Tolson said the legislation was "robust and fair and brings real protection to people caught up in a debt trap often not of their own making".