The number of repossession cases initiated continued to fall in 2015-16 (-43% compared to 2014-15, -82% compared to 2008-09)
Repossession in Scotland
Repossession cases involve the retaking of property when a borrower is in breach or default of a mortgage or loan secured on the property. It is usually the lender that takes ownership of the property, which is often sold to repay the outstanding mortgage or loan balance. Repossession should not be confused with eviction which, for the purposes of these statistics, refers to the removal of tenants from a rented property.
If the mortgage or secured loan lender has concerns about the level of the arrears, or is not satisfied with the proposals to repay them, he or she can raise a repossession claim in the courts. This can only happen after the lender has given a calling-up notice and has complied with pre-action requirements. Until recently, repossession cases relating to mortgages and loans were dealt with under ordinary cause procedure. However, the introduction of the Home Owner and Debtor Protection (Scotland) Act 2010 on 30 September 2010 led to these cases being raised as summary applications instead. Furthermore, the UK Supreme Court judgment in the RBS v Wilson case on 24 November 2010 directed that all active mortgage-related repossession cases be withdrawn from the courts and resubmitted as summary applications following a two-month waiting period.
However, where a repossession case relates to non-residential land or property, the action may be raised either as a summary application or as an ordinary action. Accordingly, a number of repossession cases relating to non-residential property or land continue to be raised as ordinary cause.
If successful, the pursuer has the right to take possession of the property. It is important to note that the granting of a repossession case means the court has permitted repossession to take place, but the order may not be ultimately enforced.
The overall decrease in the number of repossession cases since 2008-09 is likely to be linked to the overall recovery in the Scottish economy during this period.
Part of the decrease in the number of repossession cases initiated in 2015-16 may have been a consequence of the temporary suspension of repossession cases being taken to court by some lenders while the Bank of Scotland vs Rea case was under way. The case related to the level of charges made against customers with mortgage arrears. Following the decision of the High Court of Justice in Northern Ireland in this case in August 2014, some lenders were required to change their processes for handling arrears, which may have further contributed to the decrease in initiated cases.
The introduction of the Home Owner and Debtor Protection (Scotland) Act 2010 and the UK Supreme Court judgment in the RBS v Wilson case mentioned above resulted in the marked decrease in ordinary cause cases and the corresponding increase in summary applications observed in 2010-11 and 2011-12
In 2015-16, 67% of repossession summary applications were granted ( Table 21).
Figure 13: Repossession cases by procedure
Email: Jeremy Darot