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Session 2009 - 10
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Mortgage Repossessions (Protection of Tenants Etc) Bill

Mortgage Repossessions (Protection of Tenants Etc.) Bill

The Committee consisted of the following Members:

Chairman: Dr. William McCrea
Austin, John (Erith and Thamesmead) (Lab)
Bottomley, Peter (Worthing, West) (Con)
Buck, Ms Karen (Regent's Park and Kensington, North) (Lab)
Curry, Mr. David (Skipton and Ripon) (Con)
Duddridge, James (Rochford and Southend, East) (Con)
Efford, Clive (Eltham) (Lab)
Follett, Barbara (Parliamentary Under-Secretary of State for Communities and Local Government)
Gerrard, Mr. Neil (Walthamstow) (Lab)
Iddon, Dr. Brian (Bolton, South-East) (Lab)
Jackson, Mr. Stewart (Peterborough) (Con)
Leigh, Mr. Edward (Gainsborough) (Con)
McCafferty, Chris (Calder Valley) (Lab)
Marris, Rob (Wolverhampton, South-West) (Lab)
Russell, Bob (Colchester) (LD)
Taylor, Matthew (Truro and St. Austell) (LD)
Turner, Mr. Neil (Wigan) (Lab)
Sarah Davies, Committee Clerk
† attended the Committee

Public Bill Committee

Wednesday 10 February 2010

[Dr. William McCrea in the Chair]

Mortgage Repossessions (Protection of Tenants Etc.) Bill

9.15 am
The Chairman: I welcome hon. Members here this morning. Before we begin, I wish to make a few announcements. If they wish, members of the Committee may remove their jackets during our proceedings. Will they please ensure that their mobile phones or pagers are turned off or switched to silent mode? There are no amendments to the Bill, so we shall go straight into the clause stand part debate.

Clause 1

Power of court to postpone giving of possession
Question proposed, That the clause stand part of the Bill.
Dr. Brian Iddon (Bolton, South-East) (Lab): It is a great pleasure to be in Committee for the first time under your chairmanship, Dr. McCrea, especially as the Bill applies only to England and Wales, rather than to your part of the country.
I thank all hon. Members for attending the proceedings this morning and for their support. I hope that we can deal fairly quickly with the Bill, especially given that there are no amendments. If anything is not clear, I shall try to explain it as we go.
On Second Reading, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Dewsbury (Mr. Malik), said that this issue is a no-brainer and that there is a problem out there that the Bill is intended to fix. I hope that we can all agree to allow it to proceed back to the House and then down to the House of Lords. Everyone realises that we are time-constrained.
I thank the various external bodies that have sponsored the Bill, such as the housing advice organisations. We have also met several trade bodies representing both the lender and the borrower. I thank hon. Members on both sides of the House for supporting the Bill. There was cross-party support during our Second Reading debate, and I am optimistic and confident that we shall continue in a similar vein today. I am sure that members of the Committee who were not present on Second Reading will have had a chance to read the report of those proceedings, which I sent to them. I do not intend to repeat what I said at that time, but I shall give a brief summary of the issues covered by the Bill.
Due to a gap in legal protection, unauthorised tenants of repossessed landlords can suffer distressing short-notice evictions. The issue is about a legal anomaly that we need to fix. When much of the legislation on mortgages was brought on to the statute book in the 1970s, the market for rented properties was different from how it is today. For example, the term “buy to let” was almost never used in the 1970s, but it was part of common parlance at the turn of this century.
However, given how the economic situation was then and how it is now, there is some commonality with the mid-1970s; both situations led to some interesting developments in the tenanted property market. In the 1970s, the private rented sector was heavily regulated. That was followed by a period of deregulation in the 1980s, which, in part, has led to the current problems.
Most buy-to-let landlords are professionals who take their responsibilities seriously; I emphasise that the Bill is not aimed at responsible buy-to-let landlords. Indeed, it will not affect them. However, the rising property market in the 1990s led to landlords who were keen to make financial gain with minimal input. In those instances, individuals failed to gain consent from their lender to let before renting out a property.
Conversely, the stagnation in the current property and employment market has led to a rise in reluctant landlords—people who, for one reason or another, have rented out property to a tenant without permission from the lender, which makes the tenant unauthorised. They are people who, for example, have moved to another town to work. They have tried to sell their own property in the town they have moved from, but have failed to do so because of the economic climate. They have been servicing two mortgages, so they have put a tenant into the first property and that tenant has become unauthorised. Those tenants are covered by the Bill, too.
There are other reasons why people become reluctant landlords. Perhaps a relative has died and there is still a mortgage on the property in which they lived. If a tenant is put into that property, that tenant will become unauthorised if the permission of the lender has not been sought.
Typical owner-occupier mortgages do not allow a property to be rented out. If a landlord has not received consent to let from the lender and subsequently falls into arrears, and the lender commences possession action, the tenant is unauthorised by the lender as the landlord has not received the relevant permission. That means that the tenant has no right to request a delay of the lender, although they could, and that the lender has no obligation to give them one, although they might.
In any possession case, the tenant can turn up in court, but under current legislation the judge has no discretion to take any notice of the tenant or their circumstances. The result for any tenant is that they can often suffer extremely short-notice eviction, involving only a matter of days, with no time whatever to find alternative accommodation.
During the progress of the Bill, I have had correspondence from, and talked on radio programmes with, people who have found themselves in very difficult circumstances. Landlords have fled to Spain and left the tenant to cope for themselves. In other words, the landlord has abandoned financial responsibility. In another case, a gentleman who appeared with me on “You and Yours” came home to find the bailiffs changing the locks, and he asked what would happen to his furniture. The bailiffs were intending to put it on the pavement as they left the property, because he had not been in when they had arrived. Fortunately, he had come home and was able to deal with the situation. Some people have come back from holiday and found that they cannot enter their property because, while they have been away, court proceedings have gone on without their knowledge. They have found themselves locked out of their property after a long journey from a long-haul destination.
Everyone on the Committee believes that what happens in such cases is wrong, whatever their political opinions. The purpose of the Bill is to ensure that tenants of landlords who are repossessed by their lenders do not suffer short-notice eviction. The objective is to give the tenant the right to request that the possession be delayed by up to two months; the period does not have to be a complete two months, but up to two months, to give the tenant time to find alternative accommodation. The Bill will not prevent the lender’s right to possession, but simply delay it for a short period. I stress that it applies only in the case of unauthorised tenants.
Let us have a quick look at what the Bill contains. It will give tenants the right to be heard at possession hearings, which they are not allowed to take part in at the moment. It will give courts and judges authority to take tenants’ needs into account, and it will give powers to postpone possession by up to two months so that the tenant can find an alternative home.
The Bill will also require lenders to serve notice to a tenant or occupier of their intention to enforce a possession order. It will cover tenants of landlords in respect of whom the courts have previously made a suspended possession order. The new notice will apply to all properties subject to an outright possession order or when the suspended possession order is breached. In addition, the Bill will enable tenants to apply to delay the enforcement. Lenders will be able to dispute the claim for tenancy and apply for a warrant of execution. Tenants will be able to appeal to the court.
There are only two substantive clauses in the Bill. Clause 1 enables unauthorised tenants to apply to court to postpone the date for delivery of possession when a lender seeks to repossess the property. The clause enables the court to postpone the date by which the tenant must leave, by up to two months.
Subsection (4) allows the tenant a second, but not an additional, opportunity to apply for a postponement of possession when the lender applies for a warrant of possession. The tenant may apply directly to the lender for the delay of possession. If that application is refused by the lender, the tenant can pursue the application through the courts.
Subsection (5) enables the judge to have regard to the circumstances of the tenant. The provision is designed primarily to take into account situations in which tenants may have breached the tenancy through no fault of their own, such as the non-payment of rent when that is caused by a delay in the payment of housing benefit by a local housing authority.
Subsection (6) recognises the concerns raised by lenders, who say that they should be able to receive rent from any tenant within the two-month notice period. Subsection (7) makes it clear—again, in response to lenders’ concerns—that receipt of such rent does not create any tenancy obligations between lender and tenant. Subsection (8) defines an unauthorised tenant.
With that introduction to the Bill, I look forward to comments from the Committee. My hon. Friend the Minister might have something additional to say.
Mr. Stewart Jackson (Peterborough) (Con): Dr. McCrea, it is a pleasure to serve under your benign chairmanship for the first time; I say that hopefully.
We had a good Second Reading debate on 29 January; it was one of those rare debates during which new information comes out. The experience of hon. Members was useful in informing a better discussion—not many of us were there, so it was a question of quality rather than quantity.
The hon. Member for Bolton, South-East will not be getting so much valedictory praise in Committee as he did on Second Reading, but we are delighted to be in a position to support the Bill, which is extremely important. I pay tribute not only to the organisations that he mentioned, such as Shelter, Crisis and the Chartered Institute of Housing, but to him for the dogged and determined way in which he has pursued the Bill, which is very much for the public good. We are delighted and pleased to support it today. We hope that the Bill gets a speedy passage to the other place and is enacted into law expeditiously.
The Bill is needed because this year we could be looking at 53,000 repossessions. The issue affects at least 2,000, but possibly 3,000 or more. One of the key factors to emerge from the debate is that we have qualitative data about the impact of the problem on families, via organisations, such as the citizens advice bureaux, that do a superb job, but we do not have quantitative data on how many people are affected, on the cumulative impact on housing allocation policies or—this is the issue of most concern—on the impact of repossession on young children. The thought of very young children literally being made homeless, through no fault of their own or of their family, is intolerable.
It would be remiss of me not to make a slightly party political point, because my party was urging the Government to look at such issues as far back as March last year. Notwithstanding the sincere undertakings from the Minister for Housing and others that they were concerned and that the issues needed to be examined, we were disappointed not to see substantive commitments in last year’s Queen’s Speech or legislative programme.
It is self-evident that we do not have a problem with the Bill, because we have not tabled any amendments; nor have any other hon. Members. However, I would like the hon. Member for Bolton, South-East to consider and answer some questions on a few issues. The Minister, too, might want to touch on those issues.
9.30 am
One of the issues is the word “a”. It reminds me a bit of Bill Clinton’s problem with Monica Lewinsky—what the meaning of “is” is. The meaning of “a” is important. What is its meaning under clause 1(4)? The issue was raised by my hon. Friend the Member for Shipley (Philip Davies), regarding how many opportunities within the two months a tenant will have to make an application under the clause. Perhaps the hon. Member for Bolton, South-East will give some attention to that matter in his remarks.
The issues that I have raised are only minor, but they are nevertheless important to tease out; the fact that we have not tabled any amendments does not suggest that they are not pertinent issues. I commend the Council of Mortgage Lenders and the Building Societies Association for generally supporting the proposals in the Bill. However, they are right to say that there is a trilateral relationship between the landlord, the tenant and the lender. All the interests need to be properly protected when difficult situations arise.
With those minor caveats, I should say that clause 1 seems eminently sensible, and we support it. I would be grateful if the hon. Gentleman and the Minister addressed the issues that I have raised.
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