What impact did the eviction ban have on repossession numbers?

What impact did the eviction ban have on repossession numbers?

29 June 2021

The eviction ban finally came to an end on 31 May 2021 after being in place, in some shape or form, for well over a year.

The effect of it has been much-talked-about, but what was the actual impact of the ban in terms of landlord possession?

Recent national statistics from the Ministry of Justice on the mortgage and landlord possession statistics from January to March 2021 offer a snapshot into the dramatic impact the disqualification of bailiff-enforced eviction has had on the market.

Repossessions down significantly

While noting that all possession actions by both landlords and mortgage providers have reduced significantly following the impact of Covid-19 and associated actions to combat it, which has led to possession actions of all types dropping to unprecedentedly low levels, the effect has still been staggering.

Mortgage claims, orders, warrants and repossessions fell significantly compared to the same quarter last year, just before the pandemic hit, with mortgage possession claims, orders, warrants and repossessions by county court bailiffs declining by 85%, 96%, 99% and almost 100% respectively.

What’s more, landlord possession actions have fallen considerably, with landlord possession claims, orders, warrants and repossessions by county court bailiffs falling by 74%, 72%, 80% and 96%, respectively (compared to the same quarter last year).

Repossession rates and mortgage/landlord possession claims have declined across all regions, with landlord claims remaining concentrated in London (with nine of the highest 10 claim rates). Median timeliness for landlord repossessions has risen to 57.6 weeks, up from 21.1 weeks in the same period in 2020.

What did the publication’s statistician say?

The quarter mentioned above covered the period of the third national lockdown — several policy interventions in the possession process, including a stay on most possession proceedings in court. In addition, there were changes to notice periods, national restrictions on bailiff enforcement, and FCA instructions to mortgage lenders not to carry out enforcement activity.

“As a result, volumes of possession actions remain significantly low across all regions as these policy interventions introduced at the beginning of the pandemic have been further extended on most possession proceedings,” the report’s statistician said.

The original eviction ban came to an end in September 2020, after which possession claims resumed in the courts and were expected to rise again. However, this was not the case. “There were 2,720 reactivations last quarter (Oct to Dec 2020) which reduced to 798 in this quarter (Jan to Mar 2021),” the report said. “Claim volumes have been affected by the extension of notice periods from three to six months (apart from in egregious cases where tenants have demonstrated anti-social behaviour or committed fraud).”

In the latest quarter, where the country was in full lockdown again to cope with a damaging second wave, a small number of repossessions did take place, including three mortgage and 262 landlord repossessions, with a median average time of 15.7 and 57.6 weeks, respectively.

“These measures are volatile due to the pause placed on possessions actions and should be taken in the context of minimal volumes and the invariable additional time needed where normal courts procedures could not be followed,” the report added. “We do not expect a return to normal trends while restrictions are in place.”

Now that restrictions are easing and the eviction ban has ended, it’s likely these numbers will start to rise again, and the figures for Q3 will almost certainly be higher. However, Q2 (April to June) figures are still likely to be low, given two of those months were still under the eviction ban and the huge backlog that the courts now face, given they can hear possession cases again.

Landlord possessions – in focus

Unsurprisingly, given the eviction ban making it nigh on impossible for landlords to evict other than in the most serious of cases, the amount of landlord possession actions for all court stages fell significantly in the most recent quarter in which figures are available. All stages were down at least 72%, and repossessions were down 96% compared to the same quarter of last year (Jan-March 2020).

Claims (6,377), orders for possession (5,427), warrants (2,480) and repossessions (262) all dropped compared to last year.

Figure 3: Landlord possession actions (actual and seasonally adjusted) in the county courts of England and Wales, January to March 2016 to January to March 2021 (Source: Table 10b) (Source: Ministry of Justice)

From January to March 2021, 40% (2,542) of all landlord possession claims were social landlord claims, while 16% (1,002) were accelerated claims. However, the group making up the largest proportion of landlord claims (44% or 2,833) were private landlords – in contrast to previous quarters.

From January to March 2020, the last quarter to include months that could be counted as pre-coronavirus, the majority (58% or 14,119) of all landlord possession claims were actually social landlord claims. By comparison, the Government report found that accelerated claims and private landlord claims made up just 18% and 24% of all landlord claims, respectively.

Across all geographical regions, the fall in claim and orders volumes have been observed, with the main cluster of claims seen in London, in line with previous quarters. According to Government figures, the capital saw 1,965 landlord claims and 1,152 landlord orders at London courts from January to March 2021, accounting for 31% and 21% of all landlord possession claims and orders, respectively.

Even then, the capital still witnessed a fall of 67% (from 5,984) for landlord claims and a decline of 71% for landlord orders (down from 3,928 in January to March 2020).

January to March 2021 also saw an 80% fall in landlord warrants compared to January to March 2020 and was once again accompanied by large falls across all regions. Again, London was responsible for the largest regional number of warrants (683), accounting for 28% of all landlord warrants.

Once more, despite this, there was a fall of 79% for landlord warrants in London (down from 3,198 in January to March 2020 to 683 in January to March 2021).

You can see the full findings, and further regional breakdowns, by clicking here.

The Coronavirus pandemic has certainly disrupted the PRS, as it has many other sectors over the past 18 months. However, whilst the data shows the impact of Court closures and evictions bans, it does not illustrate the consequential impact that both Landlords and Tenants will feel for the years to come.

Tenants now face unaffordable arrears balances of tens of thousands of pounds. Subsequently, Landlords struggle to meet mortgage obligations. The consequences of both are far-reaching for all. Lenders are likely to tighten up lending criteria for BTL mortgages, and that, combined with the number of Landlords exiting the PRS, will only drive rental prices up. Stock levels are already down, and we have seen from the latest HomeLet Rental Index that rents are up 4% on last year. The trend is likely to continue, and tenants may find themselves unable to find rental properties, whether that is because of poor payment history, a lack of stock or unaffordable rental prices.

Whilst the impacts have been devastating, there have been some positives from the changes. The legal process for obtaining possession has been ineffective for some time and what the changes introduced have forced is a greater focus on landlords and tenants working together.

While we are starting to see the residential side of the sector return to some form of normality, commercial Landlords still have quite a way to go with the unwinding of restrictions. The moratorium on evictions for commercial tenants has just been extended to March 2022. With the disjointed strategy of restrictions vs financial support, it is hard to see how there can be a positive outcome for the majority.

It is without a doubt that something needed implementing to protect tenants during what was a global disaster. However, what was imposed on landlords, often without any notice, did not go far enough to balance the protection of both Landlords and Tenants.

Will Eastman, Head of Legal & Claims

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