To ensure the administration of justice during these unprecedented times, the Master of the Rolls, who is a judge of the court of appeal, has created a new Practice Direction which came into force on 27 March 2020.
The new addition, PD 51Z, places a stay of 90 days on all proceedings brought under CPR Part 55 including the enforcement of any order for possession already held, whether by warrant or writ. The stay expires on 24 June 2020 however PD 51Z does not cease to have effect until 30 October 2020 allowing the possibility of further stays.
Shortly before the creation of the new PD the Financial Conduct Authority issued guidance to regulated lenders, which was also echoed to unregulated lenders. The guidance is to be reviewed 3 months from 23 March 2020 (being the date of the guidance being issued) and provides that where a borrower is experiencing or suggests he/she will experience difficulties in making payments, a 3 month payment holiday should be offered. A lender is to ensure that the borrower is fully aware of the implications of a mortgage holiday i.e. that interest will continue to run.
The FCA has also told lenders that they should not commence or continue possession proceedings within the 3 month period, irrespective of the stage of any ongoing proceedings and such stay includes any steps taken in pursuit of possession. Similar to the offer of a payment holiday, the lender is guided to inform any borrowers in default of payment terms of the implications of possession proceedings not being issued i.e the increase in default interest and the impact that it will have on available equity in the property.
Whether you are a lender or a borrower and require advice or guidance please contact us on 0121 698 2200.
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