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The Mortgage Repossessions (Protection of Tenants) Bill has today received Royal Assent.
This Bill protects tenants when their landlords are repossessed by their lender. Where a landlord has not taken out a buy-to-let mortgage and has not received consent to let, the lender typically has no knowledge that the property has been let. The court is then unable to take account of the tenant's circumstances. Tenants often do not realise that possession proceedings have been commenced. This means they are unable to discuss their situation with those taking repossession action against their home.
Tenants can then find themselves with little or no time to find a new place to live. A recent impact assessment undertaken by this Department estimated that up to 330,000 households in England and Wales were at risk of short notice eviction if their home were repossessed due to their landlord not having lender 'consent to let'.
The new law allows judges to delay the repossession of a property by up to two months, to give tenants the time they need to find a new home. It has the backing of a wide variety of organisations including Shelter, Citizens Advice, the Chartered Institute of Housing, and the Royal Institution of Chartered Surveyors.
On the 8th April 2010 the Mortgage Repossession (Protection of Tenants) Bill received Royal Assent. This Bill provides there to be a two month delay in order to give tenants the time they need to find a new home. It is often the case that landlords let their properties to tenants without complying with the requirements under the landlord’s mortgage conditions with their lender for consent to let the property. In these circumstances tenants do not know that this has occurred (and that their tenancy is therefore unlawful) and perhaps more importantly have no control over their eviction. In entering into the tenancy agreement the tenant believes that they have a certainty of occupation of the premises for the period of time granted under the tenancy together with any legal security of tenure that the type of tenancy that they have provides them.
This legislation has been created to allow the tenants a greater period of time in which to find alternative accommodation but has the legislation gone far enough. Given the lack of control and knowledge the tenants have where the landlord defaults on the terms of its mortgage by way of payment or otherwise the act does not give sufficient redress to the tenants in respect of the property to enable them to take the appropriate action. It is our view that the legislation could have provided for the mortgage lender to abide by the terms of the tenancy so long as the tenant continues to pay the rent provided for by the agreement. This would enable the mortgage company to collect the rent to offset against any payment default by the landlord but also to serve the appropriate notice on the tenant to terminate the agreement as if they were the landlord.
Rita Wright
Legal Executive
Housing Team
May 2010 |
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