Repossession campaign launched to protect tenants

Friday, 27 March 2009 10:07 AM

A campaign to provide better protection for tenants who face homelessness because their landlord is repossessed has been launched by four housing charities today.

Shelter, Citizens Advice, Crisis and the Chartered Institute of Housing (CIH) have formed a coalition to help the growing number of private tenants who face eviction when their landlord has defaulted on mortgage payments.

The organisations are calling for a change in the law which would mean courts would have the power to defer the possession to allow the tenant to find other suitable accommodation. Currently, most tenants whose landlords are repossessed have no legal rights, which would otherwise protect them from losing their home without notice.

The housing charities say they have heard of some cases where tenants' belongings have been put out on the street and the locks have been changed. In one case a family with nowhere to go had to sleep in a car before moving into overcrowded and temporary emergency hostel accommodation a long distance from the children's schools.

Shelter chief executive, Adam Sampson, said: "Shelter has seen a steep rise in the number of tenants who have kept their side of the bargain by paying their rent but who are being thrown out onto the street because their landlords have defaulted on the mortgage and the house has been repossessed.

"With more and more landlords struggling with mortgage arrears and tenants facing repossession, the government must allow the courts to defer possession dates so that tenants can find other suitable accommodation."

Members of the joint campaign are calling for the law to be changed to give courts the discretion to take into account the circumstances of sitting tenants where an outright possession order is granted, and defer possession for a limited period of time.

The charities have today written to MPs urging them to sign an Early Day Motion, calling for changes to the law. They estimate thousands of tenants in the private rented sector could be at risk of losing their homes in this way and are warning urgent government action is needed to avoid a potential crisis.

Simon Gordon, head of communications, National Landlords Association (NLA), responded to the the campaign, saying: "We think it is absolutely right that we should be looking at offering further support for the small number of tenants affected by buy-to-let landlords who have their properties repossessed.

"It is also important to remember that, for the most part, buy-to-let landlords only experience problems with their mortgage if their tenants fail to pay their rent. Our latest research shows that 37 per cent of landlords are currently experiencing some form of rental arrears. This is bound to have an impact on the level of repossessions."

If a lender has started proceedings against a tenant's landlord, the lender is required to send notice of the possession hearing, addressed to 'The Occupier', at least 14 days prior to the hearing. From April 6th this year, the lender must send a notice to the property within five days of receiving notification of the date of the court hearing. However the notification letter will still be addressed solely to 'the Occupier'.

Sarah Webb, Chartered Institute of Housing (CIH) chief executive says: "Much of the government's focus so far during this recession has been on supporting homeowners through a number of means.

"Whilst we welcome these initiatives, we are concerned that tenants in the private rented sector are being left to the mercy of market forces. With the worst of the recession yet to come it is important that the three million households living in the sector are afforded basic legal protection when their landlords become the latest victims of the repossession crisis."

Tenants who moved in after the mortgage was taken out generally have no rights to stay in the property once it has been repossessed. A lender will be able to take action to have any occupier evicted as part of the action to repossess the property.

The Council of Mortgage Lenders (CML) believes it is important to distinguish between different groups of occupiers. CML director general, Michael Coogan said: "Everyone sympathises with those tenants who are paying their rent, and fulfilling their obligations, but who find that their landlord has not been paying their mortgage and not told their lender that they are renting out the property.

"Good tenants should not be disadvantaged, and nor should lenders, by the irresponsible behaviour of a small minority of landlords. We look forward to working with the government and advice agencies on effective measures to help the modest number of tenants affected."

The Association of Residential Letting Agents (ARLA), has responded by supporting the campaign. Ian Potter, operations manager of ARLA, said: "ARLA strongly supports the awareness raising campaign and firmly believes that the government could be doing a good deal more to mitigate the stress of tenants facing homelessness. This has already been documented in our budget submission to the chancellor and we are very keen to hold a dialogue with the government to re-assess best practice in this area.

"From April, legislation is coming into force to ensure tenants will receive more notice in regards to the threat of re-possession to their homes. However, this comes at the wrong time of the repossession process for it to be of any truly practical use."

The four charities are offering the following advice for tenants:

Always open mail addressed 'To the Occupier'. This may include notice of any possession hearings.

If you're thinking of moving into a new property, make sure the landlord has permission from the lender to rent it out. Otherwise, the lender does not have to recognise the tenancy at all.

If you were already living in the premises at the time when the mortgage was taken out, the lender may take you on as a tenant and allow you to pay rent to them directly. If you think you may be in this position, contact a Citizens Advice Bureau or Shelter.

Try to find out as much you can about your prospective landlord and his/her mortgage status before taking up a tenancy - although in practice this isn't always very easy.

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