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Memorandum from Tom Parkinson (CRED 21)
Summary
It is currently possible for tenants in the
• the circumstances in which eviction without notice can occur;
• why the issue is relevant to this inquiry; and
• why closing the loophole in the law that allows for eviction without notice is of extreme urgency if thousands of families and individuals are to be spared from abject misery.
1 My own experience of eviction without notice
1.1 Two years ago, court appointed bailiffs arrived at my door and forced myself and my housemates to leave the house we had paid the rent on for the previous year and a half. We had no idea that our tenancy was insecure. After desperate negotiation and with great reluctance, the bailiffs granted us one hour to remove our belongings.
1.2 Our landlord, who had previously lived in the house, had not paid the mortgage for several months, we had paid him the rent but he had simply pocketed while getting himself further and further into mortgage arrears.
1.3 About six months previously we had, by pure chance, discovered that he had defaulted on the mortgage so we contacted the mortgage company to request that they notify us if it happened again. This they agreed to do.
1.4 The landlord owned another home and a business that appeared to be healthy. He showed all the signs of being solvent and, after a frank and open discussion, he showed us proof from the mortgage company that he was no longer in arrears. We had good cause to think that his defaulting was a one-off. Furthermore, the promise from the legal department of the mortgage company to tell us if it happened again meant that we assumed we had good cause to feel that our tenancy was secure.
1.5 In the event, though, neither the landlord nor the mortgage company gave us any indication at all that we were about to be evicted.
1.6 The estate agent who oversaw the eviction told us that our situation is common. He regularly finds that a repossessed property has sitting tenants who are unaware that the eviction is pending. All of them are exactly the same circumstances as ours. A few days prior to our eviction he had overseen the eviction three young women, one of whom had a baby. The landlord - who had similarly pocketed their rent, failing to tell the women that the house had been repossessed - was their uncle.
1.7 As tenants we had a right to be a party at the repossession hearing. After our eviction we were told by the court that, had we attended the hearing, repossession would likely have been delayed by several weeks in order to allow us to find alternative accommodation. Of course, we had no idea that the repossession hearing was taking place.
1.8 In summary, tenants have a legal relationship with the landlord and the landlord has a legal relationship with the mortgage company. If the property is repossessed and the landlord is taken out of the picture, the security of tenancy - established in law for all other cases - disappears. This is the only situation wherein fair notice does not apply. In every other context - homeowners, council tenants, private renters, even squatters and excluded occupiers - there is a well-defined legal right to a fair notice period before eviction. These protections are an essential safeguard against destitution making it extraordinary that in one - far from exceptional - circumstance, they do not exist at all.
2 Tenancy and recession
2.1 The last few years saw a huge increase in the buy-to-let mortgage market. Encouraged by fast rising property prices, mortgage availability, tenant demand and media success stories, many more private individuals have become landlords. In 2007, 2.5 million homes were rented from private landlords: an increase of 40% in six years.
2.2 Many of these landlords will have had their financial security threatened by the credit crunch. Like anybody else, part time landlords can get into difficulty when they lose their jobs. But, having borrowed heavily to finance the ownership of a second property, such new landlords will often be particularly vulnerable to recession - and especially to the tightening up of loan terms in the frozen mortgage market. (Indeed, the recent nationalization of Bradford and Bingley was in large part forced because the bank was exposed to the buy-to-let investors who are already showing increasing rate of defaulting and then handing back their keys.) Anecdotal evidence from a local estate agent concurs that buy-to-let properties are being repossessed at a vastly disproportionate rate.
2.3 The remit of this inquiry is to discuss 'measures to help existing and prospective homeowners affected by the credit crunch.' Naturally, you will want to assess the urgent situation for homeowners facing repossession. But when owners of multiple homes, used as buy-to-let properties, face repossession, the situation for their tenants is even more desperate - because of their distinct powerlessness to do anything about it, and their lack of any effective right to be forewarned. If, as I assume, your enquiry is to focus on the repossession of those homes which will cause most misery in the credit crunch, then it must consider measures to protect private tenants from repossession.
2.4 To the extent that the new rules announced by the Prime Minister on 22 October 2008 give all properties greater protection form repossession, tenants of private landlords will also be more secure. But the changes do nothing to protect tenants in the circumstances outlined in section one.
3 The effects of eviction without notice
3.1 Eviction is normally subject to at least four weeks' notice, if we had been granted that, we would have been spared devastating misery. At the risk of stating the obvious, our enforced and summary homelessness plunged us into a period of intense hardship, the intensity of which would have been mitigated exponentially by a period of notice. This in spite of the fact that the three of us were young, healthy and capable men with a large social network of friends we could call on for help.
3.2 Those most vulnerable to eviction without notice are often the least able to cope with its impact. The effects of homelessness have been well documented elsewhere but it is essential to bear them in mind when considering this issue.
3.3 The legal department of the mortgage company acted in a way that - having thought deeply about it since - can only be described as immoral. They were acting within the law though, and they were under no legal obligation to give us any more time or assistance - even though we had asked them to keep us informed. There is no more compelling case for legal protection.
3.4 The relationship with our community was idyllic, every one of our neighbours had been in our house over the previous week. We freely shared access to our garden and our neighbours to the right, and the neighbour to the left - the Imam of the local mosque - entertained our guests the previous night by singing Sufi songs. The whole community was more cohesive and happier on account of such neighbourliness. A huge amount of energy was invested in cultivating it. It's destruction was just one of the incalculable things destroyed in an instant by the eviction.
4 Conclusions and recommendations
4.1 Both mortgage companies and bailiffs should be legally obliged to inform tenants of impending repossession with a fair notice period.
4.2 The costs of obliging mortgage companies and bailiffs to inform tenants of impending repossession are insignificant compared to the misery and destitution caused by eviction without notice.
4.3 In our case, we were simply unlucky to have found ourselves with a crooked landlord: nothing would have altered his actions. My continued ire, however, is reserved for the lawyers of the mortgage company who reneged on their agreement to keep us informed if our landlord defaulted on his mortgage again.
4.4 The only people who can be legally evicted without notice are those who play no part in the circumstances that cause the eviction.
4.5 Eviction under any circumstances is a tragedy, to evict without notice is unconscionable. In all cases it should be incumbent on the mortgage company (or whoever is serving the eviction) and the bailiffs to prove that they have served notice and without that proof, eviction should be illegal.
October 2008 |