20
Citizens Advice Scotland Scottish Association of Citizens Advice Bureaux www.cas.org.uk Citizens Advice Scotland and its member bureaux form Scotland’s largest independent advice network. CAB advice services are delivered using service points throughout Scotland, from the islands to city centres. Citizens advice bureaux in Scotland helped clients with over 500,000 new issues in 2011/12 more than 1,400 new issues for every day of the year. Nearly 200,000 clients brought new issues to a bureau over the year. In 2011/12, Scottish bureaux achieved a financial gain of almost £140million for clients based on funding of £16.9million. Scottish Association of Citizens Advice Bureaux Citizens Advice Scotland (Scottish Charity SC016637) Repossessions in Scotland: A note on the experience of Citizens Advice Bureaux in Scotland 2011-2012 Kate Timmins, ESRC Internship Project

Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

  • Upload
    others

  • View
    1

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

Citizens Advice Scotland Scottish Association of Citizens Advice Bureaux www.cas.org.uk

Citizens Advice Scotland and its member bureaux form Scotland’s largest independent advice network. CAB advice services are delivered using service points throughout Scotland, from the islands to city centres.

Citizens advice bureaux in Scotland helped clients with over 500,000 new issues in 2011/12 – more than 1,400 new issues for every day of the year. Nearly 200,000 clients brought new issues to a bureau over the year.

In 2011/12, Scottish bureaux achieved a financial gain of almost £140million for clients based on funding of £16.9million.

Scottish Association of Citizens Advice Bureaux – Citizens Advice Scotland (Scottish Charity SC016637)

Repossessions in Scotland: A note on the experience of Citizens Advice Bureaux in Scotland 2011-2012

Kate Timmins, ESRC Internship Project

Page 2: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

2

Introduction In 2011/2012, bureaux across Scotland advised on almost 52,000 housing issues which represented a spectrum of housing-related problems from access to a tenancy, to problems with the condition of a property, neighbour problems and repossession. Repossession of a rented or mortgaged property often embodies the culmination of many issues a client is facing: debt, benefits, family and employment issues can all contribute to the complex web of issues with housing. Repossession itself is typically the retaking of property, commonly by a lender as a result of the borrower or home owner defaulting on their mortgage payments. In a case of ‘non-mortgage/loan’ repossession, land or property is repossessed by the owner from an occupier who is not the owner. Usually, though not always, this refers to the eviction of tenants who are in rent arrears but this type of eviction can can also result from non-financial causes (for example, anti-social behaviour, health problems or relationship difficulties). These types of repossession have similarly important repercussions with regards to social policy; however they will not be covered in this report. Tracking national trends in Scotland in the frequency and types of repossession is of direct social policy relevance: firstly, due to the consequences of repossession, which can include homelessness; and secondly, because it can give an indication of the extent to which home owners are experiencing financial difficulties. As such, both the causes and consequences of repossessions are important for identifying housing policy priorities. The purpose of this report is to describe the situation in Scotland regarding repossessions as experienced by the Citizens Advice Service in Scotland including the causes and consequences as witnessed by Citizens Advice Bureaux (CAB). The unique data held within the Citizens Advice Service will allow for analysis of:

the types of people most at risk of facing repossession,

areas with a disproportionate burden of repossessions, and

the extent to which bureaux’ advice has prevented repossessions from taking place.

Page 3: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

3

Summary

The Citizens Advice Service use two main methods of evidence to monitor the work of the Service – statistical evidence and case evidence. Each time a client is advised within a bureau, an advice code will be logged to describe the issue which they were advised on. The first time a client is advised on an issue this is recorded as a ‘new’ issue and if a client returns for continuing advice about the same issue, that continuation is recorded as ‘repeat.’ This report will focus on the statistical evidence gathered through the computer system CASTLE. This data represents data collected by around 80% of bureaux in Scotland with the exclusion of 7 bureaux in Glasgow and Stirling CAB. These bureaux collect data in a similar way and this data is amalgamated with CASTLE data by Citizens Advice Scotland (CAS).1 However, this report is specifically concerned with CASTLE data.

Key Findings

In 2011-12, there were 4,700 new issues recorded in CASTLE, from 3,900 clients, which related to the repossession of property. This was a small increase from the previous year, in which 4,500 new issues were recorded. National figures indicated a declining trend in the numbers of mortgage/loan repossessions.

As well as new issues, there were also 7,100 repeat issues logged by bureaux staff in 2011-12. The CASTLE data revealed a far higher proportion of repeat repossession issues in 2011-12 than in 2010-11.

There was a substantial growth (over 200%) in new issues relating to the court system between 2010-11 and 2011-12, in particular a rise in issues regarding summary applications. This reflects legislative changes and legal events at the time.2

Issues regarding mortgage arrears constituted 3% of all debt issues brought to the bureaux in 2011-12. In the same year, just over half (51%) of all homelessness issues appeared to be due to property repossession. Twenty eight per cent of repossession issues referred to homelessness.

CAB data can be used to investigate the experience of certain subgroups of the population, as explained in the report. In addition, some figures are presented at the local authority level, although data collection is at too early a stage to identify areas with a disproportionate burden.

1 The figure used on page 2 represents the amalgamated statistics from all bureaux including

Glasgow and Stirling. From here, any totals will represent CASTLE data only. 2 This rise also reflects the fact that some bureau began recording their statistics in CASTLE during

the 2011/2012 year and as they previously did not use this recording system, the 2010/2011 figures

take account of less bureaux

Page 4: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

4

Although the client base may not be representative of the Scottish population, bureaux data are of particular value in establishing the experience of people who do not enter the courts system. The advice and monitoring provided by CAB across Scotland could play an important role in the prevention of avoidable repossessions.

Page 5: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

5

Repossessions in Scotland - national statistics The most recently published national statistics on repossessions in Scotland are from the Civil Judicial Statistics Scotland, 2010-11 publication3. The year from which this publication takes its data (2010-11) encompasses the passing of the Home Owner & Debtor Protection (Scotland) Act 2010, which changed the type of proceeding under which repossession cases are initiated (see page 18). Therefore numbers of repossession cases initiated are presented from both ordinary cause (the former procedure) and summary application (the new procedure) figures. In 2010-11, there were 5,224 repossessions cases initiated that related to a mortgage or loan, including 4,245 ordinary cause and 975 summary applications. The Scottish Sheriff Courts also report the number of cases disposed of, which in 2010-11 was 5,573 mortgage/loan cases, of which 5,083 were ordinary cause and 489 were summary applications. It should be borne in mind that the courts data are unable to indicate which cases, initiated or disposed, actually result in repossession. In addition, the figures included in the number of disposals do not necessarily correspond to the cases initiated. The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar, as opposed to fiscal, year, and are therefore not directly comparable to national statistics. Furthermore, the CML is not able to break the data down into regional figures, and therefore figures for Scotland cannot be isolated. According to the CML figures, there were 36,200 repossessions across the UK in 2011. This compares to 37,100 recorded in the previous year, 2010, showing a small decline4. These figures illustrate the level of detail missing in national data sources that would enable a full depiction of the repossessions scenario in Scotland. The Repossessions Working Group assembled in 2009 identified, among the other recommendations in the group’s report, a need for better Scottish data5. Citizens Advice Scotland (CAS) holds a unique database - the CASTLE database - which contains information about issues received at bureaux across Scotland. The number of issues recorded in the bureaux has shown a steady increase in recent years, with more than half a million issues now documented each year. In the 2011-12 financial year, there were approximately 190,000 clients for whom issues were logged.

3 At the time of writing, these figures were the most recently published: The Scottish Government

(2011) Civil Judicial Statistics Scotland, 2010-11 [online] Available at

http://www.scotland.gov.uk/Topics/Statistics/Browse/Crime-Justice/civil-judicial-statistics/ [Accessed

26 Sep 2012] 4 Council of Mortgage Lenders (2012) 2011 repossessions lowest since 2007, says CML [online]

Available at http://www.cml.org.uk/cml/media/press/3142 [Accessed 24 Sep 2012] 5 The Scottish Government (2009) Repossessions Group Final Report [online] Available at

http://www.scotland.gov.uk/Publications/2009/06/08164837/0 [Accessed 2 Oct 2012]

Page 6: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

6

Whilst the number of issues regarding repossessions does not necessarily relate directly to the number of actual repossessions, or even threatened repossessions, the database holds detailed information regarding client characteristics, geographical information and in many cases the outcome of the enquiry. This should allow a more detailed examination of, for instance:

the types of people most at risk of facing repossession,

areas with a disproportionate burden of repossessions, and

the extent to which bureaux’ advice has prevented repossessions from taking place.

In addition, the greater specificity of the CASTLE coding system enables the identification of the different causes involved in potential repossessions. All of these added benefits could assist policy-makers in identifying areas of need, and could aid in the assessment of inequalities in Scotland. Repossessions in Scotland – CASTLE statistics The following figures describe the experience of the people seeking advice at Citizens Advice Bureaux across Scotland. Across the bureaux in Scotland who use the CASTLE system, there were 4,707 new issues recorded, from 3,917 clients, which related to the repossession of property in the 2011-12 financial year. The number of repossessions issues showed an overall increase from the previous year: 4,475 new repossession issues were logged in 2010-11. Month-by-month trends can be seen in Figures 1 and 2. Issues relating to repossessions constituted 2% of all new issues brought to bureaux in 2011-12 (of which there were over 250,000). Figure 1: New repossession issues at CAB, 2010-11

Page 7: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

7

Figure 2: New repossession issues at CAB, 2011-12

Page 8: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

8

What do CAB issues relate to? There are several specific issues that can be defined as repossession issues. These include:

difficulty making mortgage payments;

possession action due to mortgage arrears;

eviction due to mortgage arrears;

eviction due to second/subsequent secured loan arrears;

the court system relating to mortgage repossessions; and

homelessness (threatened or actual) as a result of possession action. The main reason behind new repossession issues in 2011-12 was difficulty making mortgage payments - at 2,337, making up 45% of repossession issues (see Figure 3). Issues regarding mortgage arrears constituted 3% of all debt issues brought to the bureaux in 2011-12. Figure 3: Proportions of new repossession issues in 2011-12, by advice area

In addition, there were a further 1,011 issues about possession or eviction due to mortgage arrears, and 352 issues about the court system. Almost 1500 issues related to actual or threatened homelessness. The proportions of these types of repossession issues were similar to the previous year, 2010-11 (Figure 4). There was a key difference apparent, however, in the number of issues relating to legal procedures, which increased substantially in 2011-12 (by 282%). This is discussed in more detail on page 18.

Page 9: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

9

Figure 4: Proportions of new repossession issues in 2010-11, by advice area

Who needs repossession advice? Of the 3,917 clients with repossession issues in 2011-12, information on their characteristics was available for 1,698 (43%). More than a third (37%) of these clients were aged between 45 and 59 years, 30% between 35 and 44, and 21% between 25 and 34 years. There were slightly fewer males presenting with repossessions issues, at 47%. The majority (73%) did not report a disability. Most of those who specified their relationship status were married and living with their spouse (32%); 26% were single and had never been married, and 17% were separated. The majority did not report any caring responsibilities (51%), but 44% had children. Clients with repossession issues were largely in full-time employment (31%), but 23% reported being unemployed. In comparison to the overall profile of bureaux clients, those with repossession issues had a higher proportion of people with no disability (usually just over half), and a larger proportion of people aged between 35 and 59. There was a greater proportion of clients who reported being separated from their spouse or partner amongst those with repossession issues; and more than usual in full-time employment or unemployed. CAB data can also be used to identify the types of issues brought to bureaux by certain subgroups of the population, such as those who may be judged vulnerable. As an example, Figure 5 below shows the numbers of new repossession issues

Page 10: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

10

brought to bureaux in 2011-12 by women who had caring responsibilities for children. There were 354 new issues recorded for this subgroup, of which the majority (55%) related to difficulty making mortgage payments. It is perhaps interesting that there were no issues from this subgroup relating to the summary application procedure, although the reasons behind this are unclear. Figure 5: Proportions of new repossession issues from women with caring responsibilities for

children in 2011-12, by advice area

The subgroup analyses also show that this subgroup appears to be over-represented where issues relating to a landlord’s mortgage repossession are recorded: 16% of these issues in 2011-12 were from women with caring responsibilities for children, although this subgroup only account for 8% overall of the new repossession issues that year. Where are repossession issues occurring? The local authorities with the highest number of repossession issues in 2011-12 included North Lanarkshire, Aberdeen City, South Lanarkshire, Fife and Highland. However, when taking into account the size of the local populations (from National Records of Scotland mid-year estimates6), the local authorities shown in Table 1 experienced the highest density of repossession issues per 10,000 head of population. The highest prevalence was in East Dunbartonshire, at 16 new issues per 10,000 people.

6 National Records of Scotland (2012) Mid-2010 Population Estimates for Settlements and Localities

in Scotland [online] Available at http://www.gro-

scotland.gov.uk/statistics/theme/population/estimates/special-area/settlements-localities/mid-

2010/index.html [Accessed 26 Sep 2012]

Page 11: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

11

Table 1: New repossession issues in 2011-12 by council area, prevalence per 10,000 head of

population (10 highest council areas only)

Council area per 10,000

East Dunbartonshire 16

East Lothian 15

Aberdeen City 15

Midlothian 13

West Dunbartonshire 12

North Lanarkshire 12

South Lanarkshire 11

Falkirk 10

Dumfries & Galloway 10

Highland 10

It is important to bear in mind that the number of all types of enquiry in relation to local population also varies by local authority, and this could be a reflection of administrative differences as well as of differing experiences by the population. The variance in prevalence of repossession issues could be influenced by such administrative differences, in addition to potential geographical variation in the number of repossession issues. Table 2 shows the prevalence of issues per 10,000 head of population in the busiest 10 local authorities. Table 2: All new issues in 2011-12 by council area, prevalence per 10,000 head of population

(10 highest council areas only)

Council area per 10,000

West Dunbartonshire 594

Highland 573 Dumfries & Galloway 545

Midlothian 461

Falkirk 446

Orkney Islands 443

North Lanarkshire 440

Fife 428

Angus 425

Scottish Borders 424

Whilst it may be difficult to judge which areas are overburdened with repossession issues, given the points discussed above, it is still possible to identify areas with a growth or reduction in the number of issues. Trends in time could indicate real

Page 12: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

12

changes in the experience of the issue by the local population (but only where data recording changes can be ruled out). Figure 6 shows the change in the number of repossession issues between 2010/11 and 2011/12 for each local authority. A decrease is apparent in Inverclyde and Aberdeen City, for example. On the other hand, extremely large increases were recorded for some areas, such as Moray. The latter is an example where the data have been skewed due to data recording: bureaux in Moray did not adopt the CASTLE recording system until 2011.7 Figure 6: Change in number of new repossession issues from 2010-11 to 2011-12 (%)

% change from 2010-11

-75%

-25%

25%

75%

125%

175%

225%

Eas

t Ayr

shire

Mor

ay

Nor

th A

yrsh

ire

Per

th &

Kin

ross

Sou

th L

anar

kshire

Sco

ttish

Bor

ders

Sou

th A

yrsh

ire

Stir

ling

Eas

t Dun

barto

nshire

Dun

dee

City

Nor

th L

anar

kshi

re

Wes

t Lot

hian

Abe

rdee

nshi

re

Falkirk A

ll

Eas

t Lot

hian

Mid

loth

ian

Arg

yll &

But

e

Gla

sgow

City

Highlan

d

Ang

us

Dum

fries

& G

allo

way

Fife

Edinb

urgh

Ren

frewsh

ire

Wes

t Dun

barto

nshi

re

Eas

t Ren

frewsh

ire

Clack

man

nans

hire

Ork

ney

Abe

rdee

n City

Inve

rclyde

How can CAS data help? The CAS data complement national statistics on repossessions in Scotland, collected via the Scottish Court Service. Bureaux data are of particular value in establishing the Scottish population’s experience of repossessions in that they could help indicate how many people face repossession but for whom the problem is resolved without entering the courts system. For example, the number of new issues about difficulties in keeping up with mortgage payments could act as an early warning system for instances of repossession, where the debt issue is not resolved and proceeds to a possession action. In 2011-12, there were 2,337 recorded issues relating to mortgage payment difficulties. In the previous year, this figure was 2,251, indicating a small (4%) increase in the year. Figures 7 and 8 illustrate the month-by-month incidence of these issues.

7 There may also be data skewing issues in regions such as East Ayrshire whose bureau do not

record using the CASTLE system but clients may, for example, have sought advice or representation

from a CAB in a neighbouring Local Authority and had their postcode recorded as East Ayrshire

Page 13: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

13

Figure 7: Number of new issues regarding difficulty making mortgage payments, monthly

totals for 2010-11

Figure 8: Number of new issues regarding difficulty making mortgage payments, monthly

totals for 2011-12

Mortgage arrears: difficulty making payments

2011-12

0

50

100

150

200

250

AprilM

ayJu

neJu

ly

August

Septe

mber

October

Novem

ber

Decem

ber

Januar

y

Febru

ary

Marc

h

Nu

mb

er

of en

qu

irie

s

The number of issues relating to difficulty in mortgage repayment was much higher than that of possession claims for arrears, which was 767 in 2011-12. It was also considerably higher than the number of issues relating to eviction as a result of mortgage arrears (244). This is perhaps suggestive that only a proportion of people faced with mortgage arrears will progress to possession claims or eviction. (Although it is important to note that these figures do not necessarily refer to the same cases.)

Page 14: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

14

Repeat issues As well as new issues, there were also 7,124 repeat issues logged by bureaux staff in 2011-12. A greater proportion of the repeat issues related to homelessness than did new issues (see Figure 9). This indicates that threatened homelessness is a complex issue necessitating revisits to bureaux by clients. Figure 9: Proportions of repeat repossession issues in 2011-12, by advice area

In 2010-11, all of the repossession-related enquiry types recorded, with the exception of threatened homelessness due to possession action, consisted of a majority of new issues (Figure 10). This pattern changed in 2011-12, with most issues being categorised as repeat issues. In both years, three quarters of the issues relating to threatened homelessness due to possession action were repeat issues.

Figure 10: Proportions of new repossession issues in 2010-11, by advice area

Page 15: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

15

Do people have other problems? Within the CASTLE database, each client can have multiple issues recorded, and each enquiry can be categorised using more than one ‘advice code’. Therefore, it is possible to identify clients who presented with multiple issues, and to identify the types of issue that tend to occur together. This enables the identification of potential problem ‘clusters’, or commonly co-occurring issues, or even the types of people most at risk of multiple problems. In 2011-12, just over half of all clients (57%) had an enquiry assigned just one advice code. The remaining 43% either had a complex issue which was categorised with more than one advice code, or had multiple issues. The number of advice codes assigned to the repossession issues in 2011-12 can be seen in Table 3 below. Advice codes are arranged in three tiers or levels, with the first tier being the broadest description under which the advice can be categorised (for example, ‘Debt’). Table 3 shows that 95% of new repossession issues were assigned just one second-tier advice code under one first-tier category. New issues in this data set had up to four second-tier codes recorded, from up to three broad areas (in this case, Debt, Housing and Legal). This illustrates that 5% of new issues were complex enough to span more than one category. Table 3: Number of 1

st tier and 2

nd tier advice codes assigned to repossession issues,

2011-12

Number of 1st tier advice codes assigned to each enquiry

Number of 2nd tier advice codes assigned to each

enquiry

1 2 3 Total

1 10,795 . . 10,795 2 26 498 . 524 3 . 5 41 46 4 . . 1 1

Total 10,821 503 42 11,366

It is also possible to examine the number of clients with multiple issues and issues. As an example, the numbers of clients with difficulty making mortgage payments who also had additional issues are presented below. These figures include both new and repeat issues. In 2011-12, of the 5,316 issues relating to difficulty making mortgage payments, there were 3,210 clients for whom additional areas of advice were recorded. Of these:

29% (940) co-presented with an issue relating to benefits, tax credits and insurance,

28% (889) had an additional housing related enquiry,

11% (349) had a legal issue as well, and

11% (360) also sought advice relating to financial products. See Figure 11 for further enquiry types.

Page 16: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

16

Figure 11: Additional types of issue recorded for clients with mortgage repayment difficulty,

2011-12 (n=3210)

Spotlight – homelessness consequences The recording of bureaux issues allows for an exploration of wider issues surrounding repossessions. One of the more serious potential consequences of repossession includes becoming homeless. Not only is this is of social policy relevance due to the distress to the individual that may be caused, but it is additionally pertinent given the Scottish Government’s 2012 commitment on homelessness, to provide accommodation to all unintentionally homeless - not just those in priority need - by 31st Dec 2012 (Homelessness etc (Scotland) Act 2003). The number of new repossession issues relating to actual or threatened homelessness can be seen in Figures 12 and 13 for each month from 2010. In the 2010-11 fiscal year, 34% of all new repossession issues referred to homelessness. This fell to 28% in 2011-12, with a concurrent drop in absolute numbers too (from 1,618 in 2010-11 to 1487 in 2011-12).

940889

360 349

183 165

80 72 54 32 22 14 12 60

100

200

300

400

500

600

700

800

900

1000

Benefits

, ta

x

cre

dits a

nd

national

Housin

g

Fin

ancia

l

pro

ducts

and

serv

ices

Legal

Rela

tionship

Em

plo

ym

ent

Health a

nd

com

munity c

are

Tax

Utilities a

nd

com

munic

ations

Consum

er

goods

and s

erv

ices

Tra

vel, t

ransport

and h

olidays

Education

NH

S c

oncern

or

com

pla

int

Imm

igra

tion,

asylu

m a

nd

nationality

Page 17: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

17

Figure 12: New homelessness issues relating to actual or threatened repossession, 2010-11

Figure 13: New homelessness issues relating to actual or threatened repossession, 2011-12

In 2011-12, just over half (51%) of all homelessness issues (of which there were 2,902 issues, including both owner-occupiers and tenants) appeared to be due to property repossession. This was similar to 2010-11 figures, of which 56% of homelessness issues were due to repossession. These proportions are far higher than indicated by national statistics, which suggest that just 5% of homelessness applicants stated the reason for their application as being due to rental or mortgage arrears. Of these, 466 applications were by owner occupiers citing mortgage default as the reason for applying8.

8 The Scottish Government (2011) Statistics relating to the operation of the homeless persons

legislation in Scotland [online] Available at

http://www.scotland.gov.uk/Publications/2011/03/07155415/0 [Accessed 26 Sep 2012]

Page 18: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

18

Citizens Advice Bureaux also record the number of homelessness issues (threatened or actual) raised by tenants as a result of the landlord’s arrears and subsequent property repossession. These totalled 105 during 2011-12, showing a 30% increase from the previous year; this was in contrast to the overall trend in all homelessness repossession issues which fell in the same year. This demonstrates some of the potential repercussions of repossession captured by bureaux, which may be otherwise missed where the mortgage lender is unaware that the property is occupied by tenants. Spotlight – changing legal landscape CAB data can also be used to assess the impact of legislative or other institutional changes on the experience of the population. An example from the repossessions data which clearly illustrates this is the number of issues relating to the court system. The Home Owner & Debtor Protection (Scotland) Act was passed in 2010 to grant further protection for home owners. The Act introduced changes to the legal proceeding for repossession cases, as well as setting out pre-action procedures for lenders to adhere to. Historically, the majority of repossession cases were made under ordinary cause procedures in the Sheriff Courts. Since the Act, repossession cases are now raised as summary applications. This was intended to make the court process simpler for defendants and to increase access to justice, as lay representation is permitted for summary applications (whereas it is not allowed for ordinary cause sessions). In addition, the pre-action procedures spelled out in the Act require creditors to follow a series of steps - including clear notification and discussion of alternative solutions with the debtor - before a repossession case is initiated. An additional event that may have impacted on the figures was the UK Supreme Court judgment in the RBS vs Wilson case in November 2010. All repossession cases were withdrawn following this judgment, and resubmitted as summary applications. In 2011-12, there were 325 issues made about the legal processes involved in repossession cases. This constituted a 282% increase in the number of this type of enquiry in 2010-11 (85). This increase can largely be attributed to the rise in issues regarding summary applications – which increased from just five in 2010-11 to 239 in 2011-12. The growth in issues relating to summary applications not only reflects the introduction of the act and the impact of the RBS vs Wilson case, but also echoes the experience of the courts. From 2009-2010 to 2010-11, the number of mortgage/loan repossession cases initiated under the ordinary cause procedure fell from 8,256 to 4,245, whilst summary applications for repossession initiated increased from four to 975.

Page 19: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

19

Conclusions National figures indicate a declining trend in the numbers of mortgage/loan repossessions, both in Scotland and across the UK. On the other hand, CAB received an increase in the numbers of issues relating to repossession in 2011-12 compared to 2010-11. There is more than one way to interpret this: firstly, the CASTLE data are more recent than that of national sources, and therefore could be highlighting a real reversal of trend; secondly, events affecting the court system could have skewed data during the period in question; or, finally, it may be the case that the increase in repossessions issues has been accompanied by an increase in pre-repossession resolution, ensuring that potential cases do not progress as far as the courts system. The CASTLE data revealed a far higher proportion of repeat repossession issues in 2011-12 than in 2010-11, especially with regards to threatened homelessness. This suggests that repossession issues are complex to address, and indicates an increased burden on bureaux resources. The high proportion of repeat issues regarding threatened homelessness was accompanied by a reduction in the number of actual homelessness issues relating to repossession. This is perhaps suggestive that threatened homelessness issues tend not to progress to actual homelessness (although it is important to state that actual and threatened homelessness issues do not necessarily correspond). The geographical information recorded by bureaux could, in time, help to identify areas with a disproportionate burden of repossessions problems. However, the existence of administrative differences, as well as the staggered introduction of the CASTLE system across the bureaux, could have resulted in a geographical bias, making conclusions from current analysis difficult to draw out. Although the client base of CAB may not be representative of the Scottish population, the data collated by CAS could make an important contribution to the evidence base for Scotland. The CASTLE database contains a level of detail not present in many other data sources, which allows the investigation into specific issues around repossessions. The recording of issues relating to the initial stages of a potential repossession, such as difficulties in meeting mortgage repayments, has the potential to act as an early warning system. In addition, the collection of client profiles enables investigation into the experience of problems by specific subgroups of the population, as illustrated by the example given in this report. Issues in themselves may not capture the actual incidence of repossessions; however they can be constructive in tracking the issues that face the population, for which they seek advice. Many of the issues in CASTLE can be linked to recorded outcomes (although data for outcomes were not presented in this report), making it a potentially invaluable resource for researching case resolution. Combined with its capacity for tracking multiple and repeat issues, this enables the CASTLE database to offer more than the one-dimensional picture presented by crude court case figures.

Page 20: Repossessions in Scotland...The Council of Mortgage Lenders (CML) collects data on mortgage lending, arrears and repossessions from each of its members. Data is presented per calendar,

20

Repossessions may only represent a small percentage of all the debt-related issues brought to CAB; however, the consequences can be significant and serious, both to the individual and to society. For this reason, the advice and monitoring provided by CAB across Scotland could play an important role in the prevention of avoidable repossessions. Acknowledgements Julie Goodlet-Rowley, Emma Milburn and Jacqueline Robertson were the Scottish Government sponsors who proposed and supervised the ESRC internship project, in collaboration with Keith Dryburgh at Citizens Advice Scotland. Thanks are also due to Andrew Waugh, the Scottish Government statistician, and the database staff at CAS, who enabled the extraction of the CASTLE data.