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Mortgage Repossessions (Protection Of Tenants Etc.) Bill


These notes refer to the Mortgage Repossessions (Protection of Tenants Etc.) Bill as introduced in the House of Commons on 16 December 2009 [Bill 15]




1.     These explanatory notes relate to the Mortgage Repossessions (Protection of Tenants Etc.) Bill as introduced in the House of Commons on 16 December 2009. They have been prepared by the Department for Communities and Local Government with the consent of Dr Brian Iddon, the Member in charge of the Bill, in order to assist the reader of the Bill and to inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

2.     The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.


3.     The Bill addresses a problem caused by the letting of property in breach of mortgage agreements. It is a standard term in most owner-occupier mortgages that the borrower is prohibited from renting out the property either absolutely, or without the lender’s consent. A landlord may rent out their property in breach of the mortgage deed and then fall into arrears. If the lender then commences possession proceedings the unauthorised tenant will have no rights against the lender. This has led to unauthorised tenants being evicted at very short notice and without any opportunity to make alternative arrangements for their accommodation.     

4.     This situation does not normally arise with tenants of borrowers with Buy To Let mortgages where the lender is aware the property is likely to be tenanted.

5.     When a lender commences possession against an owner-occupier, the lender is unlikely to be aware of a tenant in occupation. Current law does not allow the Bill 15?EN                                    54/5 tenant to be represented in a possession hearing at court or for the court to take account of the unauthorised tenant’s occupation.

6.     The Government issued a consultation document - Lender repossession of residential property: protection of tenants - on this issue, to which over 30 responses were received.     


7.     The Bill extends to England and Wales only. It applies in relation to Wales as it applies in relation to England.


Clause 1 - power of court to postpone giving of possession

8.     Clause 1 enables unauthorised tenants to apply to court to postpone the date for delivery of possession when their home is being repossessed. This clause provides that if the lender is seeking a possession order, and the unauthorised tenant applies to court, the court can postpone the date by which the tenant must leave.     

9.     Subsection (2) provides that the maximum period of postponement is two months.

10.     Subsection (4) provides that, if a tenant did not apply to the court when the possession order was made the tenant has a further opportunity when the lender applies for a warrant of possession. A warrant of possession is the means by which an order for possession is executed and possession of the property recovered. The tenant may apply direct to the lender for a postponement of possession at this stage. If the lender refuses the tenant may apply to the court to determine the issue and grant a period of postponement.

11.     Subsection (5) requires the court to have regard, when deciding whether to exercise its powers, to the tenant’s circumstances. The judge should consider whether there is an outstanding breach by the tenant of their tenancy agreement, such as non payment of rent or anti-social behaviour. The court would have regard to non payment of rent that was outside the control of the tenant, for example due to a delay in the local authority paying Housing Benefit.

12.     Subsection (6) gives the court the power to make any stay or suspension of the possession proceedings conditional on the tenant making payments to the lender in return for his or her occupation of the property.     

13.     Subsection (7) provides that if a lender collects rent from an unauthorised tenant in the circumstances mentioned there, the collection of rent does not constitute the creation of any tenancy or obligation between the lender and unauthorised tenant.     

14.     Subsection (8) defines “unauthorised tenant” as a tenant who has entered into a tenancy agreement with a landlord which does not give them any rights against their landlord’s mortgage lender. The agreement is valid between tenant and landlord.

Clause 2 - Notice of execution of possession order

15.     Clause 2 applies where a lender who has obtained a possession order applies to the court for a warrant of possession. The clause requires lenders to give notice of the proposed execution of the order at the property before the order is executed. This requirement would apply both to cases where there is an outright possession order and where a suspended possession order is breached. If a voluntary repossession is agreed between lender and borrower, the lender would normally obtain a possession order in order to sell with vacant possession; this type of situation would also be covered by this clause.     

16.     Subsection (2) provides that the possession order can be enforced only if a notice is given at the property and only after the end of a prescribed period beginning with the day the notice is given.     

    17.     Subsection (3) defines “prescribed” as prescribed by regulations made by the Secretary of State.

    18.     Subsection (4) provides that regulations may make provision about the form of notices and the way in which they must be given. The regulations may, for example, require notices to be given by recorded delivery.

19.     Subsection (6) provides that the Secretary of State must obtain consent from the Lord Chancellor before making regulations under this clause.      

20.     Subsection (8) provides that a statutory instrument made under this section will be subject to the negative resolution procedure.

Clause 4 - Commencement, Extent and Short Title

    21.     Clause 4 provides that clauses 1 to 3 come into force on an appointed day.

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