The Mortgage Repossessions (Protection of Tenants etc) Act 2010 and the Dwelling Houses (Execution of Possession Orders by Mortgagees) Regulations 2010 came into force in
The Act, which does not apply to tenants in social housing or to lodgers and licensees, prevents tenants in the private rented sector whose landlords are in arrears with mortgage repayments from being evicted on short notice – often when the bailiff turns up on their doorstep or when they return home to find that their locks have been changed.
The legislation does not prevent a lender from repossessing properties but does require it to notify a tenant that it is taking possession proceedings against the landlord. Importantly, it also enables unauthorised tenants to ask for a delay of up to two months to enable them to find alternative accommodation.
If the lender refuses or fails to reply to the tenant’s request, the tenant can ask the court to postpone the possession date. The court must take the tenant’s circumstances into account when considering such a request and, if the tenant is in breach of its tenancy agreement, must also consider the nature of the breach and whether it would be reasonable to have expected the tenant either to have avoided or remedied the breach. If the court agrees to a postponement, it can do so only once and can then require the tenant to pay the lender while the tenant remains in occupation.
Communities and Local Government (CLG) has published useful guidance on the new rules. This addresses fears that borrowers could take advantage of the legislation by installing new tenants in a property that is already subject to a possession order and colluding with them to delay the possession date: www.communities.gov.uk/documents/housing/pdf/1729687.pdf The guidance reminds readers that the court is entitled to exercise its discretion when considering the tenant’s request and suggests that it will be appropriate to refuse a postponement if the evidence suggests that a tenancy is invalid or a sham.
Interestingly, the guidance also suggests that letting agents should request evidence that landlords have asked their lenders for permission to rent their properties and should refrain from advertising until they are satisfied that consent has been obtained. By contrast, the approach suggested by the Association of Residential Letting Agents’ code of practice is more moderate. It requires members to advise clients of the need to obtain any necessary consents before letting, but does not require firms to ensure that consent has actually been obtained. It will be interesting to see if CLG guidance has any effect on future revisions of the code.
Allyson Colby is a property law consultant