Page last updated at 01:17 GMT, Wednesday, 8 April 2009 02:17 UK

Investigating the repossession risk

By Emma Snodgrass
BBC Scotland's investigations unit

Home being repossessed
Shelter Scotland said it expected there to be 7,500 repossessions this year

A total of 7,500 Scots are set to lose their homes this year.

That is 20 a day.

A BBC Scotland investigation, to be broadcast on Wednesday night has found homeowners here could be more vulnerable to repossession than those living across the border.

The investigation, Repossession, Repossession, Repossession presented by Jackie Bird and broadcast on BBC One Scotland at 2245 BST, examines how Scots could be more vulnerable to the tactics of aggressive lenders than homeowners elsewhere in the UK because of Scotland's failure to adopt the same legal measures as England and Wales.

One of those measures is called the pre-action court protocol, which forces lenders to negotiate with borrowers before taking them to court. It's been in place in England and Wales since November.

According to Ministry of Justice figures, this scheme has cut the number of repossession cases going through county courts by half.

Mike Dailly, of Govan Law Centre, said: "The pre-action protocol is a change to the rules of court to make sure the lenders only raise actions as a last resort. And ultimately the case can be kicked out if that's not the case. In Scotland we don't have anything like that.

Lenders are putting people under pressure and causing greater distress
Graeme Brown
Shelter Scotland

"I think it's a perverse situation we have at the moment and the pendulum has to swing backwards in favour of the ordinary homeowner. I think our own Scottish pre-action protocol would ensure that happens."

But north or south of the border, if you fail to negotiate a solution with your lender, you may end up in court. Yet, even here, there is a crucial difference in Scotland to the rest of the UK - as Ian Angus found out when his two-bed semi in Airdrie was under threat from repossession last year.

He had hoped to sell the house under the Scottish Government's Mortgage to Rent scheme and rent it back. But when a problem with paperwork cropped up, despite qualifying for some legal aid, he couldn't afford to go to court to fight eviction proceedings.

His home was repossessed last June, and his lender Northern Rock went on to sell it for £21,000 less than it would have fetched under the scheme. That's a shortfall he is now responsible for.

Northern Rock said they only use repossession as a last resort, adding they had asked for a best price certificate three times to ensure the Angus' were getting the best price for the property.

A spokesperson added: "While the customers had made proposals to repay the shortfall, and we were aware that a Mortgage to Rent Application had been submitted, it was made clear to the customers that the sale could not proceed without a Best Price Certificate.

For sale signs
The government said homeowners in Scotland were not more vulnerable

"It is clearly in the best interests of both the customer and Northern Rock to come to an agreement that results in any customer who has fallen into arrears continuing to make repayments and for them to remain in their home. That is our objective - repossession remains the last resort."

Shelter Scotland chairman Graeme Brown said that they had seen some aggressive lending practises.

He said: "The lenders tell us they are now following the code of practice but I have to say to you that in all my years with public services, codes of practice don't really hold enough water in terms of forcing people to act properly and we have good evidence, as I say particularly secondary lenders, are really not going by the book.

"They are putting people under pressure and causing greater distress."

He said the Council for Mortgage Lenders had already raised the forecast from 48,000 to 75,000 repossessions across the UK.

"In Scotland we expect to see at least seven and a half thousand repossessions this year," Mr Brown said. "I think if things continue to get worse in the wider economy, it's going to get an awful lot worse and I think that's a real problem.

"We have to remember, you have two hundred thousand people in Scotland on housing waiting lists already. If you have people coming out of their own homes, they'll have to join those lists which is going to put even greater demand on housing.

"If the number of repossessions rises to seven and a half thousand as may well be predicted or, or even greater, apart from just the individual what impact would this have on communities?"

'Further protection'

We took our findings to Deputy First Minister Nicola Sturgeon, who has responsibility for housing.

She said: "I simply don't accept the proposition that homeowners in Scotland are any more vulnerable to repossession than homeowners in other parts of the UK."

She said the in-court adviser service had been set up to provide advice to struggling homeowners.

She rejected the claim that the pre-action court protocol could help stop Scottish homeowners being taken to court quickly by lenders, adding: "It doesn't substantively change the rights of the lenders, the rights of the borrowers and the option the court has to dispose of the case," she said.

She added: "We've also set up a repossessions working group to look at whether we do need any further legislative or non-legislative action to give home owners further protection.

"The indications are that repossessions will increase. That's the human face of the economic downturn and it's really important that the Scottish Government and indeed the UK Government continue to be very open-minded to any changes that will help."

The repossessions group is due to report back later this month.

Repossession, Repossession, Repossession will be broadcast on BBC One Scotland at 2245 BST .

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