Government Closes Repossession Loophole

Rogue lenders keen to repossess properties - without going to court - will no longer be able to do so according to the Ministry of Justice.

Currently lenders have the legal right to repossess and sell a property without seeking either the agreement of the owner or of the courts, should the homeowner fall into 2 months of arrears.

However after the GMAX-RFC case last year where a homeowner was evicted from their property by the new owner on the grounds of trespassing, the government and the Financial Services Authority have sought to overturn this legal loophole to prevent further abuse.

Without the intervention of the courts, this legal loophole has enabled rogue lenders to abuse this power and quickly repossess properties without giving homeowners the adequate help or support they need to sort out these payments.

As a consequence many companies such as GMAC-RFC have been able to get away with applying unfair charges on their borrowers to ensure a faster repossession.

However, this could all soon be changing…

Already, the government’s advice scheme has helped over 33,000 people to deal with repossession hearings – 76% of which have been able to return to their properties afterwards – and by removing this legal loophole the FSA feel confident they can help even more.

More than a million people aged over 50 are believed to be relying on increasing property values to help fund their retirement. Yet since the onset of the recession during autumn 2007 an estimated £27,250 is believed to have been wiped off the price of UK property values.

Even following the last 7 months which has witnessed property price increases of £15,000, this overall property loss has still severely dented pre-retirees plans to use equity release to boost their retirement.


According to popular insurance company Liverpool Victoria, more than 12% of over 50s believed so much in the capital growth of their properties that they have chosen to save less independently.

And as a consequence, many now face a reduced standard of living when they hit retirement..

Yet despite these property price falls, confidence still remains in the long term value of their properties.

Through the use of equity release - where money is taken from the value of their properties – many over 50’s plan to fund their retirement by taking money out of their properties.

However, consumer group Which? feels this could be a big mistake and should only be used as a last resort.

Expensive, inflexible, and more often than not designed to leave people with little equity to play with; property experts recommend downsizing to a smaller, cheaper property instead. Not only is downsizing easier but pre-retirees can instantly benefit from these profits.

Original Article

More About the Author

Fraser Stirling, Property Mentor Delegate

No matter what the media wants you to believe, property is still the only investment route where you can benefit from an asset that will NEVER go into zero value. Even when I was university I admired properties ability to withstand the economic elements and stay strong, even when other investment forms faltered or failed. X years on, I am now the proud owner of multiple property investments - one of which earns a passive income of £4,680 and my property portfolio is still expanding. Read more