The property industry is broadly supporting a joint campaign recently launched to protect tenants who face sudden homelessness because their rented accommodation is repossessed, but issued a reminder that it was often the non-payment of rent that caused landlords financial problems in the first place.
Shelter, Citizens Advice, Crisis and the Chartered Institute of Housing (CIH) say there is a growing numbers of private tenants who face eviction with little or no warning, and through no fault of their own, because their landlord has defaulted on mortgage payments and the lender has taken possession of the property.
The organisations are calling for a change in the law that would mean courts would have the power to defer the possession to allow the tenant to find other suitable accommodation.
As the law stands, most tenants whose landlords are repossessed have none of the legal rights that usually protect tenants from losing their homes without notice. Advisers report seeing cases where the first the tenant knows about the situation is when they come home to find bailiffs in their home.
Shelter, Citizens Advice, Crisis and CIH have written to MPs urging them to sign an Early Day Motion calling for changes to the law to tackle the problem. They estimate that thousands of tenants in the private rented sector could be at risk of losing their homes in this way and are warning that urgent government action is needed to avoid a potential crisis.
Simon Gordon, the National Landlords Association Head of Communications, said: “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 percent of landlords are currently experiencing some form of rental arrears. This is bound to have an impact on the level of repossessions.
“Tenants may have difficulty meeting their rental payments but a failure to do so may put them at immediate risk of losing their home and the landlord at risk of losing their livelihood.”
When looking at the potential problem of repossession for private tenants, the Council of Mortgage Lenders (CML) believes it is important to distinguish between different groups of occupiers.
The largest group of private tenants will have a landlord who has taken out a buy-to-let mortgage. If the landlord fails to keep up their mortgage payments, a lender will often put in place a receiver of rent to accept the tenants’ rental payment for the lender instead.
CML figures show this is a widely used approach by lenders to private landlords in the Buy to Let market, and it avoids the need for court action for possession during the tenancy period.
The second group of customers are those tenants who are unknowingly renting properties under owner-occupier mortgages without the lenders’ knowledge or consent. The CML shares the concern of advice agencies that these customers can be disadvantaged through no fault of their own.
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.”
