When looking at the potential problem of repossession for private tenants, the Council of Mortgage Lenders believes it is important to distinguish between different groups of occupiers.
CML Press Release – 27 March 2009
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. As our arrears and possessions figures highlight, 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. Landlords with owner occupier mortgages will be in breach of the terms of the mortgage and potentially acting fraudulently. 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.
CML director general, Michael Coogan commented:
“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.”