New Protection For Unauthorised Tenants

On 1 October 2010 the Department for Communities and Local Government published its Guidance to the Mortgage Repossessions (Protection of Tenants etc) Act 2010.

The Mortgage Repossessions (Protection of Tenants etc) Act 2010 is intended to try and increase protection to tenants whose landlords have let their mortgaged property without the lender’s knowledge or consent, or if repossession proceedings are commenced due to the landlord falling into arrears. The guidance is published to inform lenders, landlords and tenants of their rights and responsibilities under the Act.

Under the above Act the courts will have the power to postpone an order for delivery of possession and to stay (or suspend) the execution of a possession order for up to two months. It also places an obligation on mortgage lenders to give notice at the property of the proposed execution of a possession order.

Prior to the new Act the mortgage lender could easily resist the tenant’s claim to statutory protection to remain in the home by denying that any contractual right or interest in the land that the tenant had affected the mortgagee’s title. So although the unauthorised tenancy bound the landlord and tenant in a tenancy, it did not bind the lender. Therefore all the lender had to do was avoid acknowledging the tenancy by claiming it was simply a breach of the mortgage terms.

The new Act allows the tenant the right to ask for a postponement for delivery of possession for up to two months. This therefore gives unauthorised tenants, under an assured shorthold tenancy, the same statutory protection as authorised assured shorthold tenancy tenants.

The Act also requires the lender, in all cases, to give notice at the property of the proposed enforcement of a possession order.

Therefore possession can now be delayed, although not prevented.

Oliver Kew

Published on 27/10/2010