Tenants need eviction safety net
TENANTS who face eviction because their landlord cannot afford mortgage repayments should receive urgent protection from banks and the Government, say campaigners.
The charities Shelter, Citizens Advice, Crisis and the Chartered Institute of Housing (CIH) are concerned about the growing numbers of private tenants who face being made homeless with little or no warning, because the owner has missed mortgage payments and the lender attempts to repossess the property. The number of buy-to-let landlords unable to keep up payments on their mortgages more than doubled during the second half of last year, hitting record highs of almost 27,000, according to the Council of Mortgage Lenders.
The CML predicts 75,000 homes to be repossessed during 2009, of which 12 per cent are likely to be properties in the buy-to-let sector — most of which will have tenants who may never have missed a month’s rent payment.
The new campaign calls for a change in the law, which would mean courts would have the power to delay the possession to allow the tenant to find other suitable accommodation.
As the law stands, most tenants whose landlords’ properties are repossessed have none of the legal rights that usually protect tenants from losing their accommodation without notice.
Cases have been reported where the first the tenant knows about the situation is when they come home to find bailiffs in their home. Not only do they face losing their homes, they could be out of pocket depending on how far rent was paid in advance.
While lenders may be amenable to allowing tenants to stay on and pay rent to an agent they have appointed, this is very much at the bank’s discretion.
The charities have written to MPs urging them to sign an Early Day Motion calling for changes to the law to tackle the problem.
Leslie Morphy, chief executive of Crisis, says: “We risk forgetting that tenants of private landlords are extremely vulnerable to the recession. It is outrageous that the first time some people discover they are going to lose their home is when the bailiffs ring the doorbell.
“Tenants need legal protection to ensure that they at least have reasonable time to find somewhere else to live. The alternative too often can be homelessness.”
The combination of falling rents, longer periods between tenants, and a lack of cheap mortgage deals have spelt disaster for many of the amateur landlords who bought properties towards the end of the buy-to-let boom.
The largest group of private tenants has a landlord with a buy-to-let mortgage. If the landlord fails to keep up their mortgage payments, a lender can put in place a “receiver of rent” to accept the tenants’ rental payment for the lender instead. This avoids the need for court action during the tenancy period. The second group is those tenants who are unknowingly renting properties under owner-occupier mortgages without the lenders’ knowledge or consent.
Landlords with owner-occupier mortgages will be in breach of the terms of the mortgage and potentially acting fraudulently. Michael Coogan director general at the CML, says: “This is irresponsible behaviour which disadvantages both the tenant and the lender, who will be unaware of each other’s interest.
“Where no payments are being made by the occupier, or the occupier is not looking after the property, the lender will wish to enforce its rights to possession as soon as possible, rather than allow the landlord’s arrears to build up or the property’s state of repair to deteriorate.”
The CML agrees that there is a need to review current arrangements for giving notice to occupiers, to seek to ensure there are no “nasty surprises” for private tenants, and to review what would be a reasonable period to enable occupiers to move out in cases where the lender is entitled to possession.
Coogan says: “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.”
Simon Gordon at the National Landlords Association defended the repossessions figures.
“It is 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,” he says. “Our 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.”
