What Happens When a House is Repossessed?
Facing the possibility of repossession is an incredibly difficult situation. The formal repossession proceedings can lead to the loss of your home and have long-lasting negative effects on your credit score.
Key Statistic: In the fourth quarter of 2024, 1,030 homeowner-mortgaged properties were repossessed in the UK. This represents a significant increase of 12% from the previous quarter and a concerning 54% rise compared to the same period in 2023. (Source: UK Finance)
We'll guide you through what happens when a house is repossessed in the UK, outlining each stage of the process. However, it's crucial to remember that the best course of action is always to communicate with your mortgage lender at the very first sign of financial difficulty, ideally before you miss a mortgage payment.
An 8-Step guide for possession of property
Lender Communication and Pre-Action Requirements
Before a mortgage lender can proceed with court action for repossession, they are legally required to take certain steps to try and resolve the situation with the borrower. These are often referred to as pre-action requirements.
Your mortgage lender must:
- Inform you of the total amount outstanding on your mortgage.
- Consider any reasonable request you make to change the way you pay your mortgage.
- Respond to any offer of payment you propose.
- Provide written reasons within 10 days if they reject your offer of payment.
- Allow you a reasonable timeframe to consider any proposals they put forward.
- Give you at least 15 days written warning before starting court action.
- Notify you of the date and time of any repossession hearing.
- Inform your local council within 5 days of receiving notification of the court hearing date, in case you need to seek homelessness assistance.
Even if the lender does initiate court action, it's still possible to reach an agreement with them. If an agreement is made, you will still need to attend the scheduled court hearing to inform the judge, unless you are notified that the hearing has been cancelled or postponed.
The Possession Order
Following the court hearing, the judge will decide your case. The law dictates that a lender can only repossess your home if the court grants permission. The judge has several options:
- Adjourn (Delay) the Hearing: The judge may decide to postpone the hearing to a later date, often to allow you more time to present evidence or make payment arrangements.
- Set Aside the Case: This means the judge decides that no possession order will be made, and the case is closed.
- Make a Repossession Order: If the judge grants this, it gives the lender the legal right to take possession of your property.
There are different types of possession orders:
- Outright Possession Order: This order specifies a date (usually 28 days after the hearing) by which you must leave your home. If you do not leave by this date, the lender can apply to the court for a warrant of eviction.
- Suspended Possession Order: This allows you to remain in your home as long as you adhere to a payment plan set out in the order, which will typically include your regular mortgage payments plus an additional amount to cover the arrears. If you miss these payments, the lender can apply to the court for a warrant of eviction.
- Money Order: This order requires you to pay the lender a specific sum of money (usually the arrears, court fees, and the lender's legal costs). While a money order on its own cannot lead to eviction, if you fail to make these payments, the lender could return to court to seek a possession order.
- Possession Order with Money Judgment: This combines a possession order with a judgment for a specific amount of money owed. This usually includes the arrears, court fees, and the lender's legal costs. If the property is sold for less than this amount, you will still owe the remaining debt.
- Time Order: This order, more commonly used for second mortgages or credit agreements secured on property, allows the judge to change the terms of your mortgage for a set period, such as reducing payments or altering the interest rate. If you fail to meet the revised payment terms, the lender can seek eviction.
Eviction
If the court grants an outright possession order and you do not leave your home by the date specified, the lender can then apply for a warrant for possession. This is a legal document that authorises a court bailiff to evict you from the property.
Even after a warrant for possession has been issued, you may still have a final option: asking the court to suspend the warrant. This means requesting a delay to the eviction, potentially allowing you to remain in your home if you can demonstrate that you can now make payments or have a viable plan to repay the arrears.
To apply for a suspension, you complete an application form and submit it to the court, clearly stating that you require an urgent hearing before your scheduled eviction date.
There will usually be a court fee associated with this application, although you may be exempt if you are on benefits or have a low income (known as ‘fee remission’).
Seeking immediate legal advice from a solicitor or a housing advisor is strongly recommended if you are at this stage and wish to try and suspend the warrant for possession. They can help you with the application process and represent you at the hearing.
The Sale of the Property
After eviction, the mortgage lender takes possession of the property and puts it up for sale. They aim to recover the outstanding mortgage debt, including any arrears, interest, and costs incurred during the repossession process.
The lender has a responsibility to try and sell the property for a reasonable market value. While your direct involvement in the sale process is limited, the lender should keep you informed. You may have some limited rights to challenge the sale if you believe it's not being conducted fairly or at a reasonable price.
It's important to understand that if the sale price is not enough to cover the total amount you owe on your mortgage, you will still be liable for the remaining debt. This is known as a mortgage shortfall, and the lender can pursue you for this amount through other means.
After the Sale and Getting Help
The fact that your property has been repossessed will have a significant negative impact on your credit score; failure to make mortgage payments is reported to credit reference agencies.
This record of repossession will make it much more difficult to obtain future loans or other forms of credit for many years.
It's crucial to seek help and advice if you have gone through repossession or are facing this possibility. Here are some key organisations that can provide support:
- Citizens Advice: Offers free, impartial advice on a wide range of issues, including debt and housing.
- Shelter: Provides expert housing advice and support to people facing homelessness or housing problems.
- Your Local Council: Can offer advice and assistance to help you find new accommodation. Depending on your circumstances, they may also provide emergency or longer-term housing options. You can find your local council's contact details on the government website.
If you are considering buying another property, you must disclose the previous repossession to any new mortgage lender. This can make securing a new mortgage more challenging.
Also, if you still owe money to your previous lender, they may have a claim on some of the proceeds if you sell any future property.
It's worth noting that the government's Mortgage Rescue Scheme, which aimed to help people at risk of repossession, is currently closed.
However, it's possible that similar schemes may be introduced in the future, so it's always worth checking with the advice organisations mentioned above for the latest information on available support.
Who can repossess your home?
In most cases, the entity that can repossess your home is the mortgage lender with whom you have a mortgage agreement secured against the property. This is typically a bank or a building society.
However, in some less common situations, other entities might have the legal right to seek repossession. For example, if you have other loans secured against your property, such as a second charge mortgage or a secured loan, those lenders could also pursue repossession if you fall into significant arrears on those debts.
Additionally, if you have unpaid debts that have resulted in a charging order against your property, creditors could apply to the court for an order for sale, which could lead to you having to leave your home.
It's worth noting that landlords with buy-to-let mortgages are often viewed differently than consumer homeowners, and repossession proceedings against them can sometimes move more quickly as they are seen as operating a business.
How long does it take to repossess a property?
Generally, the process from the first missed mortgage payment to eviction can take anywhere between 6 to 12 months.
However, in situations where the arrears are significant and there is little prospect of repayment, or if the borrower does not engage with the process, it could happen more quickly, possibly within a month of court proceedings commencing.
For more detailed information on the legal process and the different stages of repossession orders, you can refer to the official government guidance available here: Repossession Orders.
What if the property is jointly owned?
If a property is jointly owned and one of the owners falls into mortgage arrears, the lender can still pursue repossession of the entire property. All joint borrowers are typically "jointly and severally" liable for the mortgage, meaning each person is responsible for the full amount of the debt, regardless of their individual contributions or circumstances.
If one of the joint owners has become bankrupt, this can further complicate the situation. You can find more information on this topic in our article: What Happens if a Joint Owner Becomes Bankrupt?
Can a Form A restriction stop a repossession?
A Form A restriction is a note on the property's title register at the Land Registry. It indicates that the property is held on trust, often meaning that the legal owners hold the property for the benefit of themselves as beneficial owners in unequal shares.
While a Form A restriction itself doesn't directly prevent a repossession, it does mean that the lender would typically need to involve all registered owners in the possession proceedings.
It can sometimes add complexity to the process, but it doesn't guarantee that repossession will be stopped if mortgage arrears are significant and the lender has a valid claim.
How to prevent repossession
While understanding the repossession process is important, the best outcome is to avoid it altogether. Here are some proactive steps you can take to prevent your home from being repossessed:
Communication with your Lender
As soon as you anticipate or experience financial difficulties that might affect your ability to pay your mortgage, contact your lender immediately. Don't wait until you've missed several payments.
Lenders often have departments dedicated to helping borrowers in hardship and may have various options available.
Your lender might be able to offer temporary solutions such as a payment holiday, a switch to interest-only payments for a period, or an extension of your mortgage term to reduce monthly payments (though be aware this will increase the total amount of interest you pay over the life of the loan).
Understand your Mortgage Terms
Make sure you fully understand the terms and conditions of your mortgage agreement, including your interest rate, payment schedule, and any clauses related to financial difficulty.
Regularly review your budgets and finances
Take a close look at your income and outgoings to see if there are any areas where you can cut back spending to prioritise your mortgage payments. Creating a realistic budget can help you stay on track.
Seek free and impartial debt advice
Organisations like Citizens Advice, StepChange, and the National Debtline offer free, confidential, and impartial advice on debt management. They can help you assess your situation and explore potential solutions.
Check for government support schemes
While the National Mortgage Rescue Scheme is currently closed, it's worth checking with the advice organisations mentioned above or your local council to see if there are any regional or updated government support programs available for homeowners facing financial difficulties.
Consider Income Protection Insurance
If you don't already have it, think about income protection insurance that could cover your mortgage payments if you become ill or unemployed.
It is also strongly recommended that you arrange sufficient protection (for example, life assurance, critical illness, income protection etc.) as appropriate to your circumstances to enable you to maintain or contribute towards your mortgage payments if any one party to the mortgage becomes unexpectedly unable to make payments towards the mortgage.
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
