29 Jan 2010 : Column 1025

House of Commons

Friday 29 January 2010

The House met at half-past Nine o'clock


[Mr. Speaker in the Chair]

9.33 am

Julie Morgan (Cardiff, North) (Lab): I beg to move, That the House sit in private.

Question put forthwith (Standing Order No. 163).

The House divided: Ayes 0, Noes 51.
Division No. 65]
[9.33 am


Tellers for the Ayes:

Nia Griffith and
Jessica Morden

Bottomley, Peter
Brennan, Kevin
Brown, Lyn
Clark, Greg
Corbyn, Jeremy
Crausby, Mr. David
Cruddas, Jon
Davey, Mr. Edward
Davies, Philip
Duddridge, James
Fitzpatrick, Jim
Flint, rh Caroline
George, rh Mr. Bruce
Gidley, Sandra
Goodman, Mr. Paul
Grogan, Mr. John
Hanson, rh Mr. David
Hendry, Charles
Iddon, Dr. Brian
Irranca-Davies, Huw
Jackson, Mr. Stewart
James, Mrs. Siân C.
Jones, Mr. Kevan
Keeley, Barbara
Key, Robert
Kramer, Susan
Lewis, Mr. Ivan
Malik, Mr. Shahid
Mann, John
McCarthy-Fry, Sarah
Merron, Gillian
Mole, Chris
Morgan, Julie
Pope, Mr. Greg
Prosser, Gwyn
Randall, Mr. John
Rifkind, rh Sir Malcolm
Ruddock, Joan
Russell, Bob
Shaw, Jonathan
Simmonds, Mark
Simon, Mr. Siôn
Skinner, Mr. Dennis
Smith, rh Angela E. (Basildon)
Spellar, rh Mr. John
Spink, Bob
Teather, Sarah
Thomas, Mr. Gareth
Turner, Dr. Desmond
Tyrie, Mr. Andrew
Wright, Jeremy
Tellers for the Noes:

Mrs. Betty Williams and
Laura Moffatt
Question accordingly negatived.
29 Jan 2010 : Column 1026

Mortgage Repossessions (Protection of Tenants Etc.) Bill

Second Reading.

9.44 am

Dr. Brian Iddon (Bolton, South-East) (Lab): I beg to move, That the Bill be now read a Second time.

The Bill empowers unauthorised tenants to apply to a court for a delay of up to two months when their home is being repossessed.

In November 2002 I was drawn 17th in the private Members' ballot and, despite that, successfully managed to steer through the Bill that became the Marine Safety Act 2003. In November 2009, I was fortunate enough to be drawn first in the ballot for private Members' Bills in what will be my final Session in Parliament. I hope that this Bill will be as successful as my previous private Member's Bill.

After attempting to steer the Registration Service Bill through, I persuaded my right hon. Friend the Minister for Housing, when he was the Treasury Minister with responsibility for the Office for National Statistics, to include the clauses in my private Member's Bill in the Statistics Bill announced in the Queen's Speech in 2006, so I can claim some credit, too, for the Statistics and Registration Service Act 2007.

As the House knows, more recently I have been attempting to prevent street traders using the Pedlars Acts of 1871 and 1881 to trade illegally, by introducing the Pedlars (Street Trading Regulation) Bill both as a ten-minute Bill and in the following year as a presentation Bill. However, I will leave it to other Members to see that business through.

Mr. Bruce George (Walsall, South) (Lab): Will my hon. Friend kindly stop gloating? I have tried for 36 years and I have not even come bottom of the ballot.

Dr. Iddon: My right hon. Friend makes me feel very small. I hope that after my exit from the House, he will be far more successful. At least I am making room for him.

Peter Bottomley (Worthing, West) (Con): I can claim only 34 years, but I hope that that success will be shared between us.

Dr. Iddon: I am honoured to have the hon. Gentleman as a sponsor of my Bill, so he has a share in at least one private Member's Bill.

Bob Spink (Castle Point) (Ind): Will the hon. Gentleman allow me?

Dr. Iddon: Indeed. Everyone can stake their claim.

Bob Spink: I warmly congratulate the hon. Gentleman. The House will be diminished by the loss of his charm, his courtesy, which is unfailing, and his wisdom. We all wish him well after the election. My private Member's Bill, which became the Confiscation of Alcohol (Young Persons) Act 1997, gave the police powers and is the most used criminal law in the land now, apart from the road traffic laws. Can the hon. Gentleman confirm
29 Jan 2010 : Column 1027
whether clause 1(1) of his Bill giving the tenant protection against immediate eviction will relate not just to the conventional mortgage repossession proceedings, but to individual proceedings taken by the lender against the tenant who is, in effect, a trespasser against the landlord? Protection in both those cases is needed.

Dr. Iddon rose-

Mr. Speaker: Order. Before the hon. Gentleman proceeds, let me say that we have had an enjoyable Cook's tour of the legislative experience of individual hon. Members, but that probably will suffice. I know that interventions subsequently will not follow the model of the hon. Member for Castle Point (Bob Spink).

Dr. Iddon: The scope of my Bill will be self-evident when I finish my speech, which I hope will be relatively short. I thank the hon. Member for Castle Point (Bob Spink) for his comments, but he will not attract me to join his minority party.

I want to acknowledge the thousands of people who wrote to my office. We received more than 3,000 items of correspondence from individuals outside this place who offered me advice on the Bill to select. In most cases, that has obviously led to disappointment, and I apologise to all those whose Bills I have not chosen to proceed with today. I hope they will understand why I do not have the time to write back to them all individually. However, I thank them.

This is an extremely truncated Session of Parliament, with only six Fridays realistically available to deal with private Members' Bills, assuming that the general election is in May or June, rather than earlier. As a consequence, I have chosen what I consider to be a relatively simple Bill with only two main clauses. That the Bill has cross-party support is indicated by the names of the right hon. and hon. Members who have kindly agreed to sponsor it, and I thank them all for their support.

When I became chairman of Bolton city council's housing committee in 1986, I gave the then director of housing, John Roe, a list of 20 priorities that I wanted to pursue. The No. 1 priority at that time was homelessness, so it seemed appropriate to end my parliamentary career by again tackling homelessness. The Bill has arisen as a result of inquiries and complaints that Crisis, Shelter, Citizens Advice and the Chartered Institute of Housing started to receive in 2007, and I thank all those organisations for their support in introducing the Bill.

Bob Russell (Colchester) (LD): Could I suggest to the hon. Gentleman that when he took over the housing portfolio in Bolton almost a quarter of a century ago the problem that the Bill is designed to deal with did not exist?

Dr. Iddon: As far as I am aware, that is probably correct, and I shall explain why.

The changes proposed in the Bill follow recommendations made by the Select Committee on Communities and Local Government. It has the support of the National Housing Federation and the three national landlord organisations in England and Wales-the Residential Landlords Association, the British Property Federation
29 Jan 2010 : Column 1028
and the National Landlords Association-where it will be applicable if it finds its way on to the statute book. The Council of Mortgage Lenders has also expressed its support for the principles in the Bill.

I remind the House that 126 right hon. and hon. Members signed early-day motion 1154 on this issue in the previous Session, and as of today 90 have signed early-day motion 643 in support of the Bill.

Philip Davies (Shipley) (Con): The hon. Gentleman says that the Council of Mortgage Lenders agrees with his Bill in principle, but, as I am sure he is aware, it has suggested two small amendments. Is he minded to support those amendments at a later stage? If not, what objections does he have to them?

Dr. Iddon: The Department for Communities and Local Government and I have been in close contact with the Council of Mortgage Lenders, and we are aware of its feelings about the Bill. We listened to outside organisations, and amendments were made to the original Bill, so the Bill before us addresses some of those objections. I am not sure to which two amendments the hon. Gentleman has referred, but we believe that we have satisfied the Council of Mortgage Lenders. We hope that if the Bill does not satisfy it, the accompanying regulations will. We want to carry all organisations with us.

Following the representations that were made to the Government by the external sponsors of the Bill, in 2009 the DCLG published a consultation document, "Lender repossession of residential property: protection of tenants". The consultation on that document closed on 14 October, and we still await its findings, although I believe that they are almost ready for publication.

A combination of rising house prices, the credit crunch and the difficulty of getting anything like a 100 per cent. mortgage means that home ownership is out of reach for most people-certainly more and more. Consequently, more people than for a long time have been attracted to the private rented sector. There are now 3 million households in that growing sector; in England alone, 14 per cent. of households live in it.

We have seen the buy-to-let market grow, too, as a result of those changes. Most tenancies are assured shorthold tenancies, usually of six or 12 months' duration. Landlords can gain possession of such tenancies by giving only two months' notice outside the fixed term. Most buy-to-let landlords pay a commercial rate on their lending and a higher arrangement fee than domestic or residential borrowers in order to purchase suitable properties. I want to make it clear that the Bill does not apply to the normal buy-to-let market.

Most owner-occupier mortgages prevent the borrower from renting their property without the lender's consent. However, a significant number of people have been borrowing money without telling the lender that they intend to buy a property to let to a tenant or tenants. As a consequence, those so-called residential-turned-let-RTL-tenancies are considered to be unauthorised in law, and the tenants are unprotected by the relevant housing legislation. If, therefore, their landlord defaults on the loan and the lender seeks to repossess the property, the tenants will lose their right to two months' notice and may face homelessness. That applies even if they are within the fixed term of the tenancy agreement.

29 Jan 2010 : Column 1029

Unauthorised tenancies can arise in other ways. People become reluctant landlords. They might inherit a property that they cannot sell or move to another property-perhaps in another town to find a job-and find it difficult to sell the one from which they have moved. In either case, they might decide to rent out a mortgaged property to a tenant without informing the lender. Some owner-occupiers might find themselves in financial difficulty and move to alternative accommodation-to live with relatives or friends, for example-and generate income by renting out their property to a tenant, again without telling the lender. In a recession, the number of owner-occupiers choosing that option is likely to increase.

It is very difficult to count how many repossessions involve RTL tenancies. The DCLG estimates that there were between 2,000 and 3,000 such repossession cases last year, but advice agencies believe that that is the tip of the iceberg. The DCLG estimates that there are currently 324,000 RTL households. Many of those tenants, especially if they are single, are not entitled to housing from their local authority should they become homeless. Consequently, they do not end up on any registers when they lose their homes, so it is difficult to count them. Instead, they have to make alternative accommodation arrangements, perhaps by moving in with friends or relatives, if they can.

Citizens Advice now deals with about 1,000 homelessness inquiries a year as a result of the problem, and Shelter's website advice page on RTL mortgages had more than 12,500 hits between June 2008 and October 2009. In a Crisis survey of advisers who help people to access the private rented sector, more than 60 per cent. said that they had been in contact with someone whose landlord had had a property repossessed. Undoubtedly, that is an increasingly important problem, which urgently needs the legislation that I am introducing.

If a property has been rented to an unauthorised, or RTL, tenant, the only warning that the tenant may receive of repossession before the initial court hearing or the issuing of a notice of eviction is a notice that the lender must now address to "The Tenant or Occupier". Those notices often go astray or remain unopened, and sometimes they are buried in piles of junk mail, especially in blocks of flats. Before 2009, when secondary legislation was brought in, notices were addressed only to "The Occupier". The Government changed the legislation in the hope that more tenants would open such correspondence and engage in repossession proceedings, but that is difficult.

Many RTL tenants first realise that they might be homeless only when bailiffs turn up on their doorstep to repossess the property. Some RTL tenants have arrived home to find that locks have been changed while they have been away from the property, at work or on holiday. I think that all Members will consider that to be unacceptable. The Bill is aimed at giving greater protection to this group of tenants.

James Duddridge (Rochford and Southend, East) (Con): The hon. Gentleman has focused his comments on the traditional forms of tenancies such as, say, assured nine-month tenancies. How would his Bill apply in protecting holiday lets or the very short-term lets that we see in central London?

29 Jan 2010 : Column 1030

Dr. Iddon: My understanding is that holiday lets would be outside the scope of the Bill. We wanted to keep it simple in trying to give justice to the 2,000 to 3,000 people, and rising, who are in this position every year. That is why I have not made it too complex.

In such circumstances, tenants can also lose out financially by losing rent paid in advance, or even their initial deposit if the landlord has not deposited it in one of the three Government-backed deposit protection schemes.

Bob Russell: Will the hon. Gentleman confirm that it is not only tenants who can lose money? In many cases, housing benefit goes to the tenant, who then pays the landlord, so the public purse loses out.

Dr. Iddon: Yes, I accept that. I will refer to housing benefit in a moment.

When a lender commences repossession against an owner-occupier, the lender is unlikely to be aware of a tenant in occupation. Current law does not allow the tenant to be represented at a possession hearing in court or for the judiciary to take account of the tenancy. The Bill provides that if a lender is seeking a possession order and the unauthorised tenant applies to the court, the court can postpone the date by which the tenant must leave the property for up to two months. That would assist many, but not all, of the tenants affected, by giving them time to find somewhere else to live before they lose possession. A warrant of possession is the means by which an order for possession is executed and possession of the property recovered.

The Bill would impose the new requirement that the lender must notify any occupier of that intention. Until that point, some tenants might be unaware that anything is amiss, so if a tenant had not applied to the court when the possession order was made, they could apply directly to the lender for a postponement of the order at the warrant stage. If that request were refused, the Bill would empower the tenant to apply to the court to determine the issue and grant a period of postponement of up to two months.

The Bill would not unfairly empower tenants who have breached their tenancy-for example, through non-payment of rent, antisocial behaviour, or damage to the property-as the court would be required to have regard to such breaches of tenancy when considering whether to exercise its powers; nor would squatters and trespassers be empowered by the Bill. However, the court would take into consideration a delay in the payment of housing benefit by a local authority.

The Bill also provides that if a lender chooses to collect rent from the unauthorised tenant during the notice period agreed, then doing so would not be considered to create a new tenancy. The Bill includes the power to make regulations requiring lenders to seek a new notice to enforce possession before they can seek a warrant of possession. It also gives a power to specify the means by which such a notice is served on the tenant.

In summary, there are two points in the process at which the tenant can intervene, if they so desire. The court could either postpone the date of delivery of possession by up to two months, or stay or suspend execution of the warrant for up to two months. The court
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could make any suspension conditional on rent payments continuing between the tenant and lender. The tenant would be entitled to one period of suspension only. Clause 1(4) states:

and so on. I am confident that a court would understand that the word "a" means only one suspension. In rare cases where a tenant seeks a second delay, I am confident that the lender's agent would ensure that the court is made aware that the tenant had previously applied and received a postponement of possession for up to two months.

Some concern has been expressed that the tenant might not engage in the legal process at the first opportunity, even when they were aware that proceedings for possession had commenced. In the majority of cases, the tenant would be unlikely to be aware that proceedings had commenced, for the reasons that I have given. However, clause 1(5) makes it clear that

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