– A Loosening of the Practice Direction May be Imminent

We recently saw a 90 day hold on residential possession proceedings as result of introduction of New Practice Direction 51Z to Stay Possession Proceedings which came into force on 27th March 2020. 

There are still mechanisms to make exceptional applications where circumstances require but all of these face the significant hurdle of having to overcome the Practice Direction. The main change made from the Practice Direction was for all proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession to be stayed for a period of 90 days.

On 18 April 2020, a further change was made to the above Practice Direction, which meant that:

  • the stay imposed on possession proceedings does not apply to a claim against trespassers 
  • the stay imposed does not apply to applications for and the making of interim possession orders 
  • parties to possession proceedings can make applications for case management directions where they are agreed by the parties – this will enable possession proceedings to resume effectively once the 90-day stay has otherwise expired.
  • to clarify, the stay imposed does not prevent the issue of claims, but simply stays claims.

This summarises the position at end of business 18 April 2020, but we understand there is a further possible change in the pipeline to Practice Direction 51Z for those matters where properties are in negative equity – in other words, those cases where the market value of a property falls below the outstanding amount of a mortgage secured on it. The issue of course is that any 90 day hold on these matters will make the financial position worse for both lender and customer. 

In one court case yesterday, the Judge considering the matter advised parties that a forthcoming possible change to the Practice Direction may allow claimants, where there is a probable negative equity position, to apply for hearings notwithstanding any stay. 

We would strongly support this further change to Practice Direction 51Z, if it is made, to allow progression of negative equity cases to prevent a deteriorating financial position for both lender and customer. 

Watch this space for further developments – and if you would like to discuss further, please get in contact.

Mark Higgins, Chairman