 House of Commons |
Session 2009 - 10 Publications on the internet Mortgage Repossessions (Protection of Tenants Etc) Bill |
Mortgage Repossessions (Protection of Tenants Etc.) Bill |
The Committee consisted of the following Members:Sarah Davies, Committee
Clerk † attended the
Committee Public Bill CommitteeWednesday 10 February 2010[Dr. William McCrea in the Chair]Mortgage Repossessions (Protection of Tenants Etc.) Bill9.15
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 1Power
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. Another
concern, which the Building Societies Association had, was about the
need for the court to consider the specific circumstances not only of
the tenant, but of the borrower and the lender. The association was
concerned about whether the discretion of those
parties would be fettered by the clause as it relates to the Financial
Services Authority’s ruling in reference code 13.6.1 of
“Mortgages and Home Finance: Conduct of Business
Sourcebook”, or MCOB, in respect of treating borrowers in
arrears fairly. The hon. Gentleman might wish to consider that matter
too. I will not get on to clause 2 in respect of the suggestion that
notice be sent to the property by the Courts Service rather
than the lenders; perhaps we can discuss that later in the
proceedings.
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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