Consumer credit - Frequently asked Questions
Here are some useful Frequently asked Questions for leaseholders and shared owners wishing to apply for consumer credit.
Network Homes has FCA authorisation to carry out certain activities that are regulated by financial services legislation. These activities are debt counselling, entering into regulated credit agreements as a lender and exercising lender’s rights under regulated credit agreements.
The authorisation allows us to enter into financial arrangements with residents, to allow you, where appropriate, to repay charges due over extended periods of time (over more than 12 months).
This will be initially offered to leaseholders and shared owners who face exceptional costs as a result of the building safety work and who are unable to afford paying them back within a 12-month period. There is an application process to be followed if someone wants to apply for an arrangement and each application will be considered on a case by case basis.
A loan is a lump sum of money paid to a borrower that is repaid over a fixed term. Under this credit/support scheme no money would be paid to leaseholders or shared owners. Instead they would be given a period of time to pay their share of the costs of the building safety work. By giving you this period of time in which to pay, we are providing you with credit.
It is zero interest. But if a resident defaults on repayment terms, interest may be charged on the payments that have been missed at 4% above Bank of England base lending rate or we may begin legal proceedings.
There is no catch – but not everyone will be eligible.
Network recognises that the charges arising from the building safety work are unexpected and some of our residents may not be able to afford paying them. If you are assessed and found to be in this situation, we want to try to support you. On the basis that you can and will meet monthly payments agreed with Network as part of your application, we will cover the related costs of the charge and administering it. But if you don’t keep up your payments, or we discover that you did not disclose your full financial position when applying for the arrangement, we will add interest and/or take other appropriate action.
No, you’re not obliged to apply for one of the credit arrangements. Remediation work will be charged through your service charge and we must follow the 'Section 20' process. This is legislation that outlines how much can be charged, the challenge process etc.
But if you have received an estimate or notice which identifies you have a building remediation charge to pay and you don’t believe you can afford repaying it within the 12 month period, you can apply for this credit arrangement to enable you to pay it back over a longer period of time.
If you have received an estimate or notice confirming that you are required to pay a building remediation service charge, you will also have been told that you may be eligible for a credit arrangement should you want to enter into one to support you in your repayment of this charge. If this was not referenced in your letter, then the service charge is not one which would be eligible under these credit arrangements.
In the letter, you will have been sent a link to this section and to the application webform.
As directed on the form, if you wish to apply for an arrangement, please complete and submit the form completing it fully and truthfully.
Network is offering credit arrangements on the below terms:
|Charge / Credit Amount||Maximum number of months for repayment||Charge’ to be entered into on the property recording the credit owed|
|£15,000 or more||120 or more||Yes|
For example, if you received notification of a £2,500.00 service charge for major works, waking watch costs, and you are unable to pay this amount within a 12 month period (as is currently required under the section 20 arrangements), you can apply for a credit arrangement to repay back the total amount up to 24 months/two years on an interest free basis.
In the form, you will be asked how much of an arrangement you wish to enter into and under what repayment term and amount.
The Leasehold Services tTeam will review your application and contact you within 10 working days to confirm if your application has been accepted, if more information is needed, if you are to be referred to the debt advice team who need to consider your application in more detail with you, or if you are not eligible for the arrangement.
If your application has been accepted, the leasehold team will write to you to confirm the position and send you the relevant agreement and guidance detailing the terms of the arrangement. You should make sure you read this carefully. If you need any support or advice with the agreement or the position you can contact the leasehold team (to discuss the arrangement) or the debt advice team for further advice or support on your financial position and the implications of the repayment arrangements.
Once you have signed and returned the document to us, we will update our records and your accounts and write to you to confirm the arrangement in place and when the first payment is due.
Where the credit amount is for £5000 or more, a legal charge will be entered into, securing the debt against the property. This means that a restriction will be placed on the Land Registry, stopping you from selling your property until the debt has been repaid or you have entered into an alternative agreement with us. If you sell or re-mortgage your home before the debt is cleared the debt to Network will be paid off from the proceeds.
To enter into a charge, if you have a mortgage on your property, we will require your lender's consent. If you apply for credit of £5000 or more, as part of the application consideration process, once you have sent us the form, we will directly contact your lender. Please don’t submit a form for an arrangement of £5000 or more unless you are happy for us to contact your lender to seek their consent for this charge.
Lender consent may not always be given and so even if Network approves your application, unless your lender agrees, we will not be able to put the arrangement in place.
We will try to keep you informed of where we are up to in this process throughout, but please be patient. We are not able to determine how long a lender may take to consider an application.
Presuming we receive lender consent, we will proceed with the application and send you the agreement and guidance for you to review, sign and return. Once we have the signed agreement with you, we will proceed to enter the charge against your property, submitting the paperwork to Land Registry. You will get a form B136 from the Land Registry telling you this has happened. You don't need to reply to this form.
If you want to apply for credit but don’t want a charge on your property, the maximum credit amount you can apply for from us is £4999.99.
Network Homes is a charitable provider of social housing. We must protect the debt owed to us and on arrangements of £5000 or more, we consider the security of a charge necessary for us to offer this amount of arrangement.
Any arrangement which is for £15,000 or more will require a more detailed affordability assessment. If you are applying for an arrangement for this amount, you will be sent a further form to complete before your application is passed to the debt advice team. You will need to provide evidence to confirm your financial position such as a bank statement dated within the last 3 months.
This process and form may also be required where the leasehold team assess that you may not be able to afford the arrangement, whatever the amount. At this time, you will be referred to the debt advice team who will explain what further information is required and why this is important.
Network only wants its residents to enter into arrangements that they can afford; our hope and aim is to keep you in your property and so, through our debt advice team, we may be able to identify further means of support or advice which can assist you with your position.
Not everyone will be eligible for the arrangements and if you are able to pay the charge that is arising, you will be asked to pay it. But we will consider each application on a case by case basis, assessing whether you are able to enter into an arrangement with us and what amount it would be reasonable for you to be expected to pay to cover the total amount of the charge due.
As part of the application, we will ask you to confirm how much you earn and what, if any capital, assets or savings you may have. We may ask you to evidence this by, for example, providing a bank statement dated within the last 3 months.
We also need to know if you have had any repayment or arrears issues in the past 12 months which mean it is unlikely you are unlikely to make the repayment amounts. Or if you have multiple homes.
Dependent upon the amount of the charge that you are being asked to pay and your circumstances, our assessment may identify that you are eligible for the arrangement. Equally, it may determine that further information is required or support needed, so that you can be confident in your ability to make the repayment terms. We will keep you informed throughout the process and if you are not approved for an arrangement, we will write to you to confirm the reasons.
We are not able to give a set timeframe at this stage, but we will work to consider all applications as quickly as reasonably practicable. We will try to ensure we respond to each application within a 10 working day period and each request for information or contact within this time period.
The offer of the credit arrangement is only available for building safety costs, not for any other service charge costs. You should continue to make your monthly service charge payments, as failure to do this will mean going into service charge arrears. You can speak to our service charge team if you need more information on paying your service charge, at email@example.com.
This can vary depending on your circumstances and depends on how much money you owe. Payment terms can range from 12 months to over 10 years depending on how much you owe. Repayment amounts could range from £150 per month to a maximum of £250 again depending on your agreement and circumstances. We will work with you to agree what is reasonable and affordable for you.
Our payment plans are designed to be as clear as possible; we are obliged under the applicable regulations to set out clearly what these are before you enter into any agreement, as well as all the relevant information you may need. This includes how much you will have to pay and what the consequences will be if you fail to make payments. Once you enter into the agreement, your monthly payment will stay the same unless you default on your payments then interest may be charged on the missed payments at 4% above Bank of England base lending rate or we may begin legal proceedings.
This is a Network Homes credit licence and does not involve any other lenders. We are regulated by the FCA and so the credit relationship will be with Network Homes only.
When reviewing your ability to enter the arrangement, you may be signposted to other third parties such as independent debt advisors or other debt support agencies and charities. Network Homes has no direct relationship with these third parties and any arrangement you subsequently enter with Network will not be influenced or affected by any other third-party engagement.
If you do not make a payment that is due, you will lose the 0% interest arrangement and interest will be charged on the payment(s) you have missed. Network may also pursue legal action to recover amounts due should you not keep up your repayments.
Where an arrangement is for £5000 or more in total a charge will be entered against the property. This means that a restriction will be placed on the Land Registry, stopping you from selling your property until the debt has been repaid or you have entered into an alternative agreement with us. If you sell or re-mortgage your home before the debt is cleared the debt to Network will be paid off from the proceeds. (please see the relevant FAQs on charges against properties above). If you want to apply for credit but don’t want a charge on your property, the maximum credit amount you can apply for from us is £4999.99
Yes – you can enter into more than one arrangement with Network, but each arrangement will be considered alongside any existing arrangements you have. We will consider if you can afford the additional arrangement and repayment terms alongside the first arrangement. Where the total amount of the arrangements (together) is over £5000, a legal charge will be entered against the property (see above) and where £15,000 or more, a detailed financial statement and assessment will be required.
The arrangements will be considered together, no matter how many you enter into, so as to take into consideration the whole debt and affordability position.
The FCA authorisation also allows Network to provide free debt advice to residents. This provision goes hand in hand with the ability to enter into financial arrangements, as we must ensure those we offer these arrangements to can and will be able to afford the repayment terms.
Debt advice will not be exclusive to those entering into financial arrangements with us. We’ll be developing activities for which the authorisation may be used to include access for all residents.
You must be open and honest with us as to your financial position throughout. If you enter into an arrangement with us without having disclosed your full income, capital or asset position, you will be deemed to have submitted false information in your application. This could lead to the arrangement being withdrawn, interest being added, legal or other action being taken.
If you realise you have completed your application incorrectly or something comes to light that you forgot to tell us, please contact us. Please speak to the Network representative who you have been dealing with and they will support you as far as they are able or refer you to our debt advice team.
If you have been fraudulent in your application, we may have to refer the matter to the relevant authority for them to determine but you will have time during the process to reflect and consider the application. Please therefore think very carefully before entering the arrangement so that you are happy you have provided all the relevant information.
Our criteria for approving a credit application aim to be fair and designed to only offer credit to those who, following a financial assessment based on the information provided or otherwise available to us, are identified as unable to repay the charges arising and therefore in need of financial assistance.
If we consider you can afford to make the payments due without the benefit of the credit arrangement being offered, your application may be rejected.
Similarly, we will try to work with you to agree repayment terms that work with you, but if you are assessed as being unable to afford repayments, you may also be rejected. We will always try to support you by identifying other means by which you can get assistance such as giving you budgeting advice or signposting you to a third party for further independent advice or support.
If you’re unhappy about how you have been treated or anything anyone from Network has said to you during this process, including the findings of the application process, you can complain by contacting our Complaints Team on firstname.lastname@example.org. If we receive a complaint, we will ensure that it is acknowledged and responded to without delay. We have timeframes we will adhere to when we receive a complaint and a two stage complaints process, so if you are unhappy with the outcome of the stage 1 investigation, you can ask for the matter to be re-reviewed at stage 2. If you remain dissatisfied, you can refer the matter to the regulator appointed to oversee complaints relating to consumer credit activities, the Financial Ombudsman Service (FOS).
If your complaint relates to the amount of charge issued, this is not a matter that would fall within the remit of our complaints process. It is a matter defined by your lease and your leasehold interest. If you wish to challenge your service charges, the proper avenue for this is through an application to the First Tier Tribunal. However, we will always try to explain any charges arising to you and resolve any issues informally in the first instance. Please contact email@example.com to ask for more information on the charges themselves.
Should you remain dissatisfied with the outcome of your complaint and you have exhausted the Network complaints process, you have the right to refer the matter directly to a ‘designated person’. A ‘designated person’ as defined by the Localism Act can be an MP or a local Councillor. They can try to resolve the complaint themselves or they can refer the complaint straight to the Financial Ombudsman Service (FOS), the regulator appointed to oversee complaints relating to consumer credit activities.
Alternatively, if you wish to refer the matter directly to the FOS then you may be able to do so, free of charge, provided you do so within 6 months of the date of the final complaint investigation outcome letter.
The contact details for the Financial Ombudsman Service are:
The Financial Ombudsman Service
London E14 9SR
The FOS can also be contacted Monday to Friday 8am to 8pm and Saturday between 9am to 1pm on 0800 023 4567/09300 123 9123.
If your lender does not accept the application, this means we are unable to enter a charge against your property. The maximum amount of the arrangement you will then be able to enter into is £4999.99. We will review whether this is affordable for you and if you are eligible for this amount and may offer you an arrangement to this amount only.
If the charge you received is for a greater amount, you can take the arrangement for any amount up to £4999.99 but will be expected to repay the remainder within 12 months from the date of the service charge notice under usual section 20 service charge arrangements
If you have been rejected for a credit arrangement, it is because the assessment carried out has shown that you should be able to afford repaying the charges owed or we do not consider you able to enter into the financial arrangement as it would not be in your best interests to do so. If you think that decision was wrong, please let us know. It may be that there is more information you can provide which may change that outcome. If not, we will always try to support you through the provision of debt advice and so we may be able to refer you to other parties who can help or support you with your position or suggest other action you can take. You can get in touch with the debt advice team on 0207 326 3721 or email Dianne.firstname.lastname@example.org
You can also speak to an independent financial or debt advisor on what your next steps may be.
You could also speak to your lender as they may be able to pay the service charge and add the cost to your mortgage, however they may charge a fee for this.
You may also find some useful information on the following websites:
LEASE (Leasehold Advisory Service)
A government funded, independent advice service for leaseholders.
Money Advice Service
A free and impartial money advice service, set up by the government.
If there are any sums outstanding under the credit agreement or your service charges, you will be expected to settle the amount through the proceeds of the sale.
Where a legal charge has been entered against your property, your sale will not complete until this charge has been removed from Land Registry. The paperwork to lift the charge is submitted when
Network's charge is recognised through the sale proceeds. We will not delay in doing this but should you be looking to sell your property, please contact the leasehold team so that we can ensure we have all relevant information in place and we can complete the requisite paperwork without delay.
No. Network will not be registering the arrangements with credit agencies.
*FCA consumer credit arrangements are regulated by the FCA and any complaints arising from these arrangements by the Financial Ombudsman Service; Network Homes Limited, reference number FRN 919890, is authorised to provide Limited Permission lending and debt counselling on a not for profit basis. Details of our FCA permissions can be found on the Financial Services Register.