Housing Loss Prevention Advice Service introduced

The Legal Aid Agency introduced a new Housing Loss Prevention Advice Service on 1 August 2023, according to a House of Commons Library briefing on mortgage arrears and repossessions in England¹. Individuals who need the service do not have to meet legal aid financial eligibility rules, but they must be at risk of losing their home¹.

The briefing sets out the wider support picture for homeowners. The Bank of England interest rate rose from 0.1% in December 2021 to 5.25% in August 2023, and the Bank estimated that by July 2023 around half of mortgagor households had seen increases in their repayments since late 2021, with higher rates expected to affect most of the remainder by the end of 2026¹. The Government, the Financial Conduct Authority and mortgage lenders agreed a Mortgage Charter in August 2023, signed by lenders representing approximately 90% of the mortgage market¹.

The charter commits lenders to measures including:

The briefing also records other measures. The FCA published guidance for firms supporting existing mortgage borrowers affected by rising living costs on 10 March 2023¹. The Government reformed the Support for Mortgage Interest scheme, which provides assistance as an interest-bearing loan for claimants of certain means-tested benefits, to allow Universal Credit claimants to access support while working and to shorten the qualifying period¹. It provided £91.4 million in 2022/23 for the Money and Pensions Service to provide debt advice in England¹. UK Finance launched a national "Reach Out" campaign to raise awareness of support for mortgage customers¹.

On arrears, UK Finance reported around 90,700 mortgages in arrears of more than 2.5% at the end of June 2023, and around 1,100 properties taken into possession in the quarter ending June 2023¹. At the end of 2009, 216,400 mortgages were in arrears by more than 2.5% of their outstanding balance and 48,900 properties were repossessed over that year¹. An industry-wide moratorium on repossessions ran between March 2020 and April 2021¹.

The briefing notes political disagreement over the approach. The Shadow Chancellor, Rachel Reeves, urged the Government to make the mortgage support measures mandatory for all lenders, while the Liberal Democrats called for a temporary £3 billion mortgage protection fund providing grants of up to £300 a month to homeowners struggling to pay their mortgage¹. The Chancellor, Jeremy Hunt, ruled out additional financial support for mortgage holders on the basis that it would add to inflationary pressures¹.

Why it matters for households

Around 7.1 million households in England own their home with a mortgage, 30% of all households, according to the English Housing Survey 2021 to 2022 cited in the briefing¹. For anyone in that group who falls behind, the practical position from 1 August 2023 is that advice on defending possession proceedings is available without passing the usual legal aid means test, provided they are at risk of losing their home¹. Lenders signed up to the Mortgage Charter, covering about 90% of the market, are committed to the 12-month minimum period from a first missed payment before repossession without consent, and to the switching and reversion terms described above¹. The briefing does not state whether the charter's terms are legally binding on signatories, and it does not report how many households have used the new advice service.

What happens next

The briefing records no end date for the Housing Loss Prevention Advice Service¹. It notes that higher rates are expected to affect most of the remaining mortgagor households by the end of 2026¹. No further dates for the Mortgage Charter or the FCA guidance are given¹.