Barrister Mortgages – Reliant on Income They Can’t Enforce?

Barrister mortgages are no longer a specific mortgage product but are a generic term used for standard mainstream mortgages offered by a number of lenders.

Barrister mortgages are no longer a specific mortgage product but are a generic term used for standard mainstream mortgages offered by a number of lenders.

The concept of Barrister mortgages aims to cater for the unique remuneration package of self employed Barristers whose income comes from a range of sources, including commercial organisations, solicitor’s client accounts, direct payments from individual or business clients or Government departments such as the legal services commission or civil service. Income received is not always consistent with payment terms and dates of expected payment being staggered, depending on the stage of the case.

This often makes financial planning and budgeting for a Barrister problematic. VAT is payable on their fees and every quarter a significant payment needs to be held back to meet these obligations. Barristers also have expenses such as Chambers rent, which generally again are chargeable on a quarterly basis, often in arrears and usually based on the received income during the previous quarter. They also have a range of ongoing commitments such as subscription costs to legal periodicals, travel expenses from their Chambers to Court and dress costs, such as bands, shirts or suits. As with all businesses, income tax also needs to be paid at two six monthly intervals during the course of the year, requiring financial discipline in order not to overspend.

The ongoing expenses coupled with often sporadic income payments can lead to short term cash flow problems and lenders have to be sensitive to the manner in which Barristers are uniquely remunerated. Many Barristers, despite the significant endeavours of their fees clerks, can be owed significant monies from past clients and it is not unknown for Barristers to be carrying this aged debt, or money owed for well over 10 years.

There remains a gentleman’s agreement, still unchallenged that Barristers are unable to claim for unpaid fees and unlike other businesses which can sue clients who don’t pay, a Barrister is prevented from this privilege, a point established in case law.  Unlike other industries, a Barrister enters a non-enforceable, non-binding contract with a solicitor for legal services and whilst this relationship is based on trust and honour, a number of Barristers have been left nursing a large debt, no longer honoured. This has caused recent discussion at the Bar Council, the trade body which represents the Barrister profession.

UK mortgage lenders are aware of this relationship, the inability to enforce debt and the nature and frequency in which fees are paid. The Bar would assist its members if it revised the Terms of Work, making the terms more favourable to Barristers, allowing them to claim past fees.  In a credit crunch, it is becoming increasingly problematic for the profession, particularly those at the junior end, to secure a mortgage based upon their earnings potential and future projections. This is not assisted if they cannot enforce debt they are currently owed.