Background
The Housing Strategy recognised that government has a role in helping to create the right conditions for a stable and sustainable housing market in the medium to long-term, and that to do so there must be support for those currently experiencing difficulties sustaining home ownership.
Support includes advice and much of the advice available is currently funded by the department and provided by Housing Rights. However, the experience of those delivering this service and evidence from a range of stakeholders highlighted that further action was needed to address the issue of repossessions, and the impact of negative equity, in Northern Ireland.
Within this context the Minister established a repossessions taskforce, composed of people with knowledge and expertise from across a range of sectors, to investigate the impact of negative equity, repayment arrears and possessions in Northern Ireland.
Membership
The members of the Taskforce were drawn from:
- Department for Social Development
- Department of Justice
- Council of Mortgage Lenders
- Consumer Council NI
- Housing Rights
- Northern Ireland Housing Executive
- The Law Society
- Royal Institute of Chartered Surveyors
- Landlords Association NI
- Queen’s University Belfast
Objectives
The Taskforce was asked to consider, at a minimum, the following objectives based on best available data and reasonable assumptions:
- analyse and measure the level of possessions (including buy-to-let possessions) and incidence of negative equity currently being experienced in the Northern Ireland housing market
- establish what information and tools are available to project the level of possessions and incidence of negative equity that are likely to occur within the Northern Ireland housing market over the short, medium and long-term
- identify and analyse the causes of possessions and negative equity in Northern Ireland
- identify evidence-based potential interventions to prevent or mitigate the impact of possessions and negative equity on the Northern Ireland housing market. This should include comparative analysis of interventions taken forward in other jurisdictions and, as a minimum, cover mortgage rescue schemes, preventing possession initiatives and lender forbearance
- identify the legislative basis and the financial and administrative resources that would be required to implement the potential interventions identified/recommended
Timescales
The work of the Taskforce was bound and completed in two phases. The first phase focused upon the extent and nature of the possessions issue in Northern Ireland, with a view to producing an initial research report by the end of June 2014. Outcomes from this research then informed the second phase of developing evidence-based recommendations for potential mitigating actions. A final report was published in May 2015.
Initial evidence paper
The first phase of the Taskforce’s work made use of available sources and the expertise of its members to investigate the impact of negative equity, repayment arrears and possessions in Northern Ireland.
The evidence was the foundation of the Taskforce’s consideration of potential mitigating actions to improve the existing provision of advice and support currently available to distressed borrowers.
Helping Households to Help Themselves conference
The Housing Repossessions Taskforce held a conference on Wednesday 5 November 2014 to bring together advice providers, mortgage lenders and government officials to discuss innovative approaches to tackling mortgage arrears and repossessions that have been adopted in other jurisdictions; and explore how similar schemes or products may work within Northern Ireland.
Following the issue of the final report by the Repossession Taskforce the Department for Social Development (now DfC) engaged the Personal Finance Research Centre at Bristol University to providing a regionally focused, borrower-level insight on the effectiveness of debt advice in Northern Ireland. A copy of their report is available:
Final report
The Housing Repossessions Taskforce developed a range of recommendations on how existing systems of support could be improved and how people in difficulty could be encouraged to come forward for help earlier. These included:
- the establishment of a ‘mortgage options hub’ for the delivery of specialist mortgage debt advice at an early stage
- borrowers take responsibility for improving their debt position by accessing the free and independent channels of advice that suit their needs
- working with the behavioural insights team (the ‘nudge unit’) to examine how behavioural economics can provide an innovative stimulus to borrower engagement
- a review in to the way in which lenders communicate voluntary exits, including assisted voluntary sale schemes, to their customers
- commissioning the Northern Ireland Federation of Housing Associations to complete a feasibility study on the potential of a mortgage rescue scheme in Northern Ireland
- timely assistance from the Northern Ireland Housing Executive, including a homelessness assessment for vulnerable households
View the full detail and recommendations:
Applying behavioural insights
The Behavioural Insights Team (BIT) was asked to explore ways of encouraging borrowers facing mortgage arrears to take action earlier, either by seeking advice, engaging with their mortgage lender or attending their court hearing.
This work involved reviewing the processes followed by the NI Courts and Tribunal Service, mortgage lenders and the advice sector with a view to improving aspects of those services which impact borrowers’ behaviour.
The final report set out the BIT’s proposals about what could be done to improve borrower engagement. The suggestions ranged in scale from quite detailed comments about letters to borrowers issued by various parties to higher level policy suggestions for a range of government departments to consider.
BIT also conducted a pilot exercise to examine the extent to which behavioural economics could optimise the number distressed borrowers engaging with their lenders and advice providers at an earlier stage. A copy of their report is available:
A further BIT research trial was conducted to test the impact of ‘behaviourally-informed’ communications between lenders and their customers facing arrears. The objective was to increase the rate of successful contact between banks and customers entering or already in arrears. A copy of their report is available:
Implementation and Review of Recommendations
Due to the nature of the challenges, implementation of many of the recommendations required support and collaboration from a range of partners across a number of sectors.
The Review report sets out the actions that have been undertaken over the past three years and how each recommendation has been progressed within an improving economic context.
Additional information
A comprehensive range of services are in place to support households if they are worried about their situation. The earlier borrowers receive advice and engage with their lender, the more likely they are to arrive at an affordable and sustainable solution.
The nidirect website as well as organisations such as Housing Rights and Citizens Advice can help households who are struggling with their mortgage repayments or worried about the future.