The Mortgage Repossession (Protection of Tenants etc) Act 2010 came into force at the beginning of October 2010. 

The Act and its supporting regulations provide some limited protection for unauthorised tenants (tenants occupying without the consent of the landlord’s lender) in residential property to bring them broadly in line with the safeguards afforded to authorised tenants under the Protection From Eviction Act 1977.

What does this legislation mean?

The new Act protects tenants by giving them the right to be heard at possession hearings, gives courts and judges authority to take tenants’ needs into account, and allows possession to be postponed by up to two months so that the tenant can find an alternative home. 

Unauthorised tenants are able to apply to the court to delay repossession for up to two months as long as:

  • The court has not already allowed an extension of time when the possession order was made.
  • The tenant has asked the mortgage lender to agree to delay the execution of the warrant and it has refused.  

The court can take into account whether the tenant has breached the terms of the unauthorised tenancy and it also has the power to order the tenant to make payment of any rent falling due directly to the lender during the period of suspension, without creating a tenancy between lender and tenant.

A reported decision

There is currently one decision which is being cited on behalf of borrowers: Bank of Scotland –v- Ashraf, Romford County Court 5 October 2010. The Bank sought a warrant of possession, and the unauthorised tenant applied for a stay in its execution, in accordance with section 1(4) of the Act. The court allowed his application, even though he had not sought an undertaking. In effect, the court decided that the request for an undertaking should be read disjunctively from the other provisions of section 1(4): this results in an unauthorised tenant being able to apply to postpone execution without necessarily having requested an undertaking from the mortgage lender.

What can lenders do?

To minimise delays in the repossession process resulting from the operation of the Act, lenders should: 

  • Ensure that tenants are fully aware of the provisions of the Act in correspondence before warrant stage.
  • Consider allowing tenants time within the scope of the Act to find alternative accommodation by way of an undertaking. 
  • Give 14 days’ notice – addressed to the tenant by name, where known - where an application for a warrant of possession is being made. Failure to do so can invalidate the warrant. 

Things to look out for...

  • The legislation is not designed to assist family members who may be living in the property, but do not have any form of tenancy agreement, nor should it be used by ‘buy to let’ tenants who already have the protection of their tenancy agreement. Be alert to any applications which appear to be from family members – these should be resisted.
  • Where a Court allows a tenant some additional time to vacate, the court should be pressed to order that rent payments are made direct to the lender. This firm has been successful in securing an order requiring a council to pay housing benefit on behalf of the tenant direct to the lender up to the date of possession, giving the lender some contribution to the mortgage payments pending possession and, thus, some comfort whilst it waits for possession. 

About the author

Phil Wilding Partner

Phil specialises in volume debt recovery including asset finance recoveries, book debt collect outs, consumer and commercial debt recovery, residential mortgage shortfall, former tenant arrears, former staff debts, club and membership collections, and pay day loans.