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Mortgage Repossessions (Protection of Tenants Etc.) Bill

Volume 504: debated on Friday 29 January 2010

Second Reading.

I beg to move, That the Bill be now read a Second time.

The Bill empowers unauthorised tenants to apply to a court for a delay of up to two months when their home is being repossessed.

In November 2002 I was drawn 17th in the private Members’ ballot and, despite that, successfully managed to steer through the Bill that became the Marine Safety Act 2003. In November 2009, I was fortunate enough to be drawn first in the ballot for private Members’ Bills in what will be my final Session in Parliament. I hope that this Bill will be as successful as my previous private Member’s Bill.

After attempting to steer the Registration Service Bill through, I persuaded my right hon. Friend the Minister for Housing, when he was the Treasury Minister with responsibility for the Office for National Statistics, to include the clauses in my private Member’s Bill in the Statistics Bill announced in the Queen’s Speech in 2006, so I can claim some credit, too, for the Statistics and Registration Service Act 2007.

As the House knows, more recently I have been attempting to prevent street traders using the Pedlars Acts of 1871 and 1881 to trade illegally, by introducing the Pedlars (Street Trading Regulation) Bill both as a ten-minute Bill and in the following year as a presentation Bill. However, I will leave it to other Members to see that business through.

Will my hon. Friend kindly stop gloating? I have tried for 36 years and I have not even come bottom of the ballot.

My right hon. Friend makes me feel very small. I hope that after my exit from the House, he will be far more successful. At least I am making room for him.

I am honoured to have the hon. Gentleman as a sponsor of my Bill, so he has a share in at least one private Member’s Bill.

I warmly congratulate the hon. Gentleman. The House will be diminished by the loss of his charm, his courtesy, which is unfailing, and his wisdom. We all wish him well after the election. My private Member’s Bill, which became the Confiscation of Alcohol (Young Persons) Act 1997, gave the police powers and is the most used criminal law in the land now, apart from the road traffic laws. Can the hon. Gentleman confirm whether clause 1(1) of his Bill giving the tenant protection against immediate eviction will relate not just to the conventional mortgage repossession proceedings, but to individual proceedings taken by the lender against the tenant who is, in effect, a trespasser against the landlord? Protection in both those cases is needed.

Order. Before the hon. Gentleman proceeds, let me say that we have had an enjoyable Cook’s tour of the legislative experience of individual hon. Members, but that probably will suffice. I know that interventions subsequently will not follow the model of the hon. Member for Castle Point (Bob Spink).

The scope of my Bill will be self-evident when I finish my speech, which I hope will be relatively short. I thank the hon. Member for Castle Point (Bob Spink) for his comments, but he will not attract me to join his minority party.

I want to acknowledge the thousands of people who wrote to my office. We received more than 3,000 items of correspondence from individuals outside this place who offered me advice on the Bill to select. In most cases, that has obviously led to disappointment, and I apologise to all those whose Bills I have not chosen to proceed with today. I hope they will understand why I do not have the time to write back to them all individually. However, I thank them.

This is an extremely truncated Session of Parliament, with only six Fridays realistically available to deal with private Members’ Bills, assuming that the general election is in May or June, rather than earlier. As a consequence, I have chosen what I consider to be a relatively simple Bill with only two main clauses. That the Bill has cross-party support is indicated by the names of the right hon. and hon. Members who have kindly agreed to sponsor it, and I thank them all for their support.

When I became chairman of Bolton city council’s housing committee in 1986, I gave the then director of housing, John Roe, a list of 20 priorities that I wanted to pursue. The No. 1 priority at that time was homelessness, so it seemed appropriate to end my parliamentary career by again tackling homelessness. The Bill has arisen as a result of inquiries and complaints that Crisis, Shelter, Citizens Advice and the Chartered Institute of Housing started to receive in 2007, and I thank all those organisations for their support in introducing the Bill.

Could I suggest to the hon. Gentleman that when he took over the housing portfolio in Bolton almost a quarter of a century ago the problem that the Bill is designed to deal with did not exist?

As far as I am aware, that is probably correct, and I shall explain why.

The changes proposed in the Bill follow recommendations made by the Select Committee on Communities and Local Government. It has the support of the National Housing Federation and the three national landlord organisations in England and Wales—the Residential Landlords Association, the British Property Federation and the National Landlords Association—where it will be applicable if it finds its way on to the statute book. The Council of Mortgage Lenders has also expressed its support for the principles in the Bill.

I remind the House that 126 right hon. and hon. Members signed early-day motion 1154 on this issue in the previous Session, and as of today 90 have signed early-day motion 643 in support of the Bill.

The hon. Gentleman says that the Council of Mortgage Lenders agrees with his Bill in principle, but, as I am sure he is aware, it has suggested two small amendments. Is he minded to support those amendments at a later stage? If not, what objections does he have to them?

The Department for Communities and Local Government and I have been in close contact with the Council of Mortgage Lenders, and we are aware of its feelings about the Bill. We listened to outside organisations, and amendments were made to the original Bill, so the Bill before us addresses some of those objections. I am not sure to which two amendments the hon. Gentleman has referred, but we believe that we have satisfied the Council of Mortgage Lenders. We hope that if the Bill does not satisfy it, the accompanying regulations will. We want to carry all organisations with us.

Following the representations that were made to the Government by the external sponsors of the Bill, in 2009 the DCLG published a consultation document, “Lender repossession of residential property: protection of tenants”. The consultation on that document closed on 14 October, and we still await its findings, although I believe that they are almost ready for publication.

A combination of rising house prices, the credit crunch and the difficulty of getting anything like a 100 per cent. mortgage means that home ownership is out of reach for most people—certainly more and more. Consequently, more people than for a long time have been attracted to the private rented sector. There are now 3 million households in that growing sector; in England alone, 14 per cent. of households live in it.

We have seen the buy-to-let market grow, too, as a result of those changes. Most tenancies are assured shorthold tenancies, usually of six or 12 months’ duration. Landlords can gain possession of such tenancies by giving only two months’ notice outside the fixed term. Most buy-to-let landlords pay a commercial rate on their lending and a higher arrangement fee than domestic or residential borrowers in order to purchase suitable properties. I want to make it clear that the Bill does not apply to the normal buy-to-let market.

Most owner-occupier mortgages prevent the borrower from renting their property without the lender’s consent. However, a significant number of people have been borrowing money without telling the lender that they intend to buy a property to let to a tenant or tenants. As a consequence, those so-called residential-turned-let—RTL—tenancies are considered to be unauthorised in law, and the tenants are unprotected by the relevant housing legislation. If, therefore, their landlord defaults on the loan and the lender seeks to repossess the property, the tenants will lose their right to two months’ notice and may face homelessness. That applies even if they are within the fixed term of the tenancy agreement.

Unauthorised tenancies can arise in other ways. People become reluctant landlords. They might inherit a property that they cannot sell or move to another property—perhaps in another town to find a job—and find it difficult to sell the one from which they have moved. In either case, they might decide to rent out a mortgaged property to a tenant without informing the lender. Some owner-occupiers might find themselves in financial difficulty and move to alternative accommodation—to live with relatives or friends, for example—and generate income by renting out their property to a tenant, again without telling the lender. In a recession, the number of owner-occupiers choosing that option is likely to increase.

It is very difficult to count how many repossessions involve RTL tenancies. The DCLG estimates that there were between 2,000 and 3,000 such repossession cases last year, but advice agencies believe that that is the tip of the iceberg. The DCLG estimates that there are currently 324,000 RTL households. Many of those tenants, especially if they are single, are not entitled to housing from their local authority should they become homeless. Consequently, they do not end up on any registers when they lose their homes, so it is difficult to count them. Instead, they have to make alternative accommodation arrangements, perhaps by moving in with friends or relatives, if they can.

Citizens Advice now deals with about 1,000 homelessness inquiries a year as a result of the problem, and Shelter’s website advice page on RTL mortgages had more than 12,500 hits between June 2008 and October 2009. In a Crisis survey of advisers who help people to access the private rented sector, more than 60 per cent. said that they had been in contact with someone whose landlord had had a property repossessed. Undoubtedly, that is an increasingly important problem, which urgently needs the legislation that I am introducing.

If a property has been rented to an unauthorised, or RTL, tenant, the only warning that the tenant may receive of repossession before the initial court hearing or the issuing of a notice of eviction is a notice that the lender must now address to “The Tenant or Occupier”. Those notices often go astray or remain unopened, and sometimes they are buried in piles of junk mail, especially in blocks of flats. Before 2008, when secondary legislation was brought in, notices were addressed only to “The Occupier”. The Government changed the legislation in the hope that more tenants would open such correspondence and engage in repossession proceedings, but that is difficult.

Many RTL tenants first realise that they might be homeless only when bailiffs turn up on their doorstep to repossess the property. Some RTL tenants have arrived home to find that locks have been changed while they have been away from the property, at work or on holiday. I think that all Members will consider that to be unacceptable. The Bill is aimed at giving greater protection to this group of tenants.

The hon. Gentleman has focused his comments on the traditional forms of tenancies such as, say, assured nine-month tenancies. How would his Bill apply in protecting holiday lets or the very short-term lets that we see in central London?

My understanding is that holiday lets would be outside the scope of the Bill. We wanted to keep it simple in trying to give justice to the 2,000 to 3,000 people, and rising, who are in this position every year. That is why I have not made it too complex.

In such circumstances, tenants can also lose out financially by losing rent paid in advance, or even their initial deposit if the landlord has not deposited it in one of the three Government-backed deposit protection schemes.

Will the hon. Gentleman confirm that it is not only tenants who can lose money? In many cases, housing benefit goes to the tenant, who then pays the landlord, so the public purse loses out.

Yes, I accept that. I will refer to housing benefit in a moment.

When a lender commences repossession against an owner-occupier, the lender is unlikely to be aware of a tenant in occupation. Current law does not allow the tenant to be represented at a possession hearing in court or for the judiciary to take account of the tenancy. The Bill provides that if a lender is seeking a possession order and the unauthorised tenant applies to the court, the court can postpone the date by which the tenant must leave the property for up to two months. That would assist many, but not all, of the tenants affected, by giving them time to find somewhere else to live before they lose possession. A warrant of possession is the means by which an order for possession is executed and possession of the property recovered.

The Bill would impose the new requirement that the lender must notify any occupier of that intention. Until that point, some tenants might be unaware that anything is amiss, so if a tenant had not applied to the court when the possession order was made, they could apply directly to the lender for a postponement of the order at the warrant stage. If that request were refused, the Bill would empower the tenant to apply to the court to determine the issue and grant a period of postponement of up to two months.

The Bill would not unfairly empower tenants who have breached their tenancy—for example, through non-payment of rent, antisocial behaviour, or damage to the property—as the court would be required to have regard to such breaches of tenancy when considering whether to exercise its powers; nor would squatters and trespassers be empowered by the Bill. However, the court would take into consideration a delay in the payment of housing benefit by a local authority.

The Bill also provides that if a lender chooses to collect rent from the unauthorised tenant during the notice period agreed, then doing so would not be considered to create a new tenancy. The Bill includes the power to make regulations requiring lenders to seek a new notice to enforce possession before they can seek a warrant of possession. It also gives a power to specify the means by which such a notice is served on the tenant.

In summary, there are two points in the process at which the tenant can intervene, if they so desire. The court could either postpone the date of delivery of possession by up to two months, or stay or suspend execution of the warrant for up to two months. The court could make any suspension conditional on rent payments continuing between the tenant and lender. The tenant would be entitled to one period of suspension only. Clause 1(4) states:

“The court may, on application of the tenant (“the applicant”), stay or suspend execution of the order for a period not exceeding two months if”,

and so on. I am confident that a court would understand that the word “a” means only one suspension. In rare cases where a tenant seeks a second delay, I am confident that the lender’s agent would ensure that the court is made aware that the tenant had previously applied and received a postponement of possession for up to two months.

Some concern has been expressed that the tenant might not engage in the legal process at the first opportunity, even when they were aware that proceedings for possession had commenced. In the majority of cases, the tenant would be unlikely to be aware that proceedings had commenced, for the reasons that I have given. However, clause 1(5) makes it clear that

“the court must have regard to—(a) the circumstances of the tenant”,

which I believe covers this concern.

Clause 1 of my Bill would prevent RTL tenants from becoming homeless without representation in court and provide a period of up to two months during which they can search for alternative accommodation. Clause 2 covers the notice of execution of a possession order, while clause 3 interprets the various terms used in the Bill. Clause 4 is about commencement and extent. I am assured that the Bill conforms with the European convention on human rights.

I want to thank the staff of the Department for Communities and Local Government for all the assistance that they have given me in putting this Bill together, and for their advice on what is rather complicated housing legislation. I also thank my researcher, Gemma Reay, who has done most of the work for me behind the scenes.

I believe that this Bill, which would be fair to the affected tenants and lenders, has widespread support within and without this House, and I commend it to the House.

I will try to keep my remarks brief because there are several Bills that we wish to get on to.

I congratulate the hon. Member for Bolton, South-East (Dr. Iddon) on bringing this Bill to the House. It is particularly good that he has worked closely with the Government to give us the confidence that all the details are right. He mentioned its application under the European convention on human rights. When the Government introduce a Bill, we usually see a regulatory impact assessment. I cannot imagine that this Bill would involve an awful lot of costs, but I would be grateful if the Minister could say whether a regulatory impact assessment has been taken forward.

If the hon. Gentleman would like to go to the Library, he will find an impact assessment and all the accessories to the Bill deposited there.

I thank the hon. Gentleman for that. Earlier today, I went to the Vote Office and asked for all the papers relating to the Bill, but I was not given one of those. Perhaps I should have probed further and asked to be assisted with all the documents rather than just the primary ones.

I do not want to intrude on the debate, but it might be a sensible innovation, or adaptation, if the Vote Office had a list of the documents that had been deposited in the Library. That would help hon. Members.

That is an excellent suggestion, particularly on private Members’ Bill Fridays, when we are never quite sure how far we are going to get and Members may find themselves debating Bills further down the Order Paper for which they are not fully prepared.

The issue underlying the Bill is a big one for my constituents. Southend has a large number of properties in multiple occupation and, particularly in times of recession, people often find themselves forced to rent out property. They may end up in the invidious position of having made mortgage commitments, and then, having lost their job, finding that they cannot afford the payments. They do not want to make things worse by going back to their lender and explaining that they are having to rent out the property—perhaps because the family has moved in with friends—in the full knowledge that the lender will have to charge them more under a buy-to-let arrangement. The fear of repossession is so great that they knowingly enter into a rental agreement that is forbidden under their tenancy. That is not specifically covered by this Bill, but perhaps it is something that the Government should be discussing with mortgage lenders. If someone is having problems with their mortgage, it should be possible to smooth the transition period by allowing them to rent out the accommodation over the shorter term instead of just letting it remain vacant.

I am particularly concerned about data protection issues that make it difficult to find the names of tenants at properties. Having rented out properties in the past, I know the problem of the big pile of mail. Anything that I saw addressed to “The Occupier” would have gone straight in the bin. It was usually from an estate agent wanting to sell the property. However, in a number of cases it is difficult for the mortgage lender to know who the tenants are, and that would be problematic in the cases in question.

My hon. Friend raises a legitimate concern. Does he agree that there is also a legitimate data protection concern if a lender is asked to write to a tenant? In doing so, they may have to give out information about the landlord who has defaulted on the mortgage, and that, too, might breach data protection laws.

My hon. Friend makes a valid point, but I hope that we can get over such problems to do the best by tenants.

In an intervention I mentioned short-term and holiday lets. Were I selected to serve on the Committee, I would want to ensure that the Bill took those lets into account. However, it is a very good Bill and I welcome it. I look forward to supporting it if it comes to a vote at some point during this Session, and I thank the hon. Member for Bolton, South-East for introducing it.

I congratulate the hon. Member for Bolton, South-East (Dr. Iddon) on introducing his private Member’s Bill. It is a fantastic swansong, and I hope that it will become law.

The Bill relates to just one piece of the jigsaw of housing in this country, and we must consider it as such. When I intervened on the hon. Gentleman, he acknowledged that a quarter of a century ago the problem did not exist. If it did arise, cases were few and far between. However, over the past two or three years cases have been brought to me in my constituency. As we all know, when an MP is notified of something it is probably the tip of an iceberg, so I suspect that the problem is more widespread.

The reason why there was not a problem in Bolton, Colchester or anywhere else in 1986 is that at that time we were still benefiting from 40 years or thereabouts of council house building. Successive Governments had embarked on building programmes that meant that people had no need to go down the route that they are now obliged to. The figures that the hon. Gentleman gave were startling and worrying, because I suspect that the situation will get worse. It is important that all political parties acknowledge that, short of protecting the realm, the most important thing that any Government should do is ensure that people are housed. Sadly, what has happened over the past quarter of century or so has meant that there has not been a supply of affordable rented housing. Increasing numbers of people are therefore obliged to look elsewhere to meet their housing needs.

There are unscrupulous people out there. We are not talking today about legitimate organisations and landlords, who welcome the Bill in the way that legitimate employers welcomed the minimum wage, because only the unscrupulous benefit from the free market that we are discussing. I am aware of six people in my constituency who have become millionaires on the back of what we are talking about today, fuelled partly or totally by housing benefit from the public purse and by the comparatively massive rents that are charged compared with those for traditional council houses and now for housing association properties.

We are dealing today with the consequence of failures in housing policy, which are forcing increasing numbers of people into the sector that the Bill seeks to regulate. I shall give an example. One of the millionaires in my constituency now owns 50 houses, and the one whom I have come across mostly recently owns 30. One has managed to acquire 12 former council houses. There are now private tenants in them, and the rents being levied are comparatively massive.

I support the Bill because of a case that has arisen in my constituency in the past two months. I believe that the hon. Gentleman has heard me discuss it with the Minister for Housing. The first time that the tenant involved was aware that something was up was when a letter arrived. It turned out that the landlord had 30 houses. I contacted the building society and urged it to transfer the rent so that the tenant could stay. The family living in the property had been paying the rent to the landlord, but the landlord had not been paying the mortgage. The mortgage company therefore foreclosed, even though the tenant was bang up to date with the rent. That rent had not been passed through to the building society. A similar situation happened a couple of years back.

I question whether some mortgage companies and other money lenders are paying due diligence. I suspect that if what is happening with buy-to-rent mortgages in my constituency is being replicated across the country, it is one of the reasons why we had a banking crisis. In the case that I described, my constituent, the tenant, was sending rent to a post office box number in the south of Essex—we do not do this sort of thing in north Essex. The building society had lent money to purchase the house to somebody whose address was who knows where, and all the tenant’s correspondence was to the PO box number. The building society kept sending reminders to the landlord, and after a while the tenant thought, “This is not quite right”, and opened one of the letters. They realised that the mortgage had been foreclosed and that they were going to be out on the streets.

There are some scams going on, and we need to ask why they are allowed to happen. The Bill is good and deserves to succeed, but it will not address other pieces in the jigsaw. It will not deal with unscrupulous letting agencies that go under and then reopen, or with the service charges of unscrupulous property management companies. Most companies operate legally and legitimately, but we are concerned about the unscrupulous ones. Nor will the Bill deal with absentee landlords, who are quite often involved in cases such as we are discussing. Sometimes they are so absent that the tenant does not even know where they are.

We will need to address that issue in Committee, because associated with absentee landlords is the fact that often in buy-to-rent properties are the tenants nobody else will touch. The social consequences of such antisocial tenants, which can be addressed by councils or housing associations if they are their tenants, cannot be addressed with the same vigour by an absentee landlord. We need to take that into account.

I welcome the Bill although, as I have said, it is just one small piece of the jigsaw. There is a housing crisis in this country, but not necessarily a housing shortage. We have a mismatch, and there are empty houses that need to be brought back into use. The Government ought to use requisition powers, or introduce new powers. In a civilised country such as ours—the fourth or fifth richest economy in the world—it is ludicrous that we have thousands of children living in poverty, yet there are empty houses. The Bill is just one small step, but it is important. I support it and I urge the Government to embrace it and all political parties to get a serious grip on this country’s housing crisis.

I very much welcome the Bill and I again congratulate the hon. Member for Bolton, South-East (Dr. Iddon)—may I call him my hon. Friend?

The 2,000 or more tenants each year to whom the Bill applies are generally vulnerable people. They are often exploited by others who are stronger and in a more secure position. They deserve the House’s help, so I hope that the Bill will be successful. It would give tenants legal status so that the lender would have to deal with a tenant, even if that tenant were unauthorised. Sometimes tenants are not part of the scam that creates their unauthorised position. They are often vulnerable people and victims, and they deserve our protection.

I am delighted with the extremely good briefing that the Residential Landlords Association sent me. It broadly supports the Bill, but asks a couple of questions about its scope and other items. It welcomes clause 2 because it

“requires notification to the tenant of intended eviction with provision for a breathing space”.

It enables everyone to consider the true situation, look for the justice in it and ensure that an injustice is not done, either to the vulnerable individual—the tenant—or the public purse. Often, as the hon. Member for Colchester (Bob Russell) said, landlords will trouser the money and not pass it on when the tenant’s payments are up to date. The lender is thus defrauded, not by the tenant but by the landlord who has pocketed the money. The breathing space in which to investigate what has happened and enable a remedy to be found if possible is essential.

We need to know whether clause 1 will protect the tenant not only when conventional mortgage repossession proceedings take place, but when the lender takes independent proceedings against the tenant as an individual. The tenant is effectively, in law, a trespasser against the lender, so the lender could theoretically take proceedings directly against the tenant. We need to know that the Bill will protect the tenant in those circumstances, too. The Residential Landlords Association briefing is excellent on that matter.

The Council of Mortgage Lenders gives a conditional welcome to the Bill. It is a little less than wholehearted, but the organisation agrees that

“in a very limited number of cases unauthorised tenants need more protection”.

The Bill will provide that. In balancing justice and what is right, and what is right for society as well as the individual, the House can and should support the Bill. I will vote for it, and I warmly congratulate the hon. Member for Bolton, South-East and wish him well for the future.

I join other hon. Members in congratulating the hon. Member for Bolton, South-East (Dr. Iddon) on continuing his triumphs in the ballot for private Members’ Bills, which he mentioned at the beginning of his speech, and on introducing the Bill. He gave some indication of the volume of requests sent to the person who is fortunate enough—or unfortunate enough—to come top of the ballot for private Members’ Bills. I have never been in that position, and, given the experience of other hon. Members who have been here a long time, I am unlikely to get the opportunity to understand how difficult it can be.

I appreciate that it must have been difficult for the hon. Gentleman to choose a Bill to introduce because I am sure that many good causes tried to benefit from his position in the ballot. I congratulate him on the Bill that he chose because he has rightly identified a problem in the market, which needs resolving. I would like to think that the Bill will get a Second Reading today with unanimous support. Some things may need ironing out in Committee, but Second Reading is about the principle of the Bill, and I wholeheartedly support that principle.

I do not see any great point in going through all the reasons for the Bill because other hon. Members have set them out, not least the hon. Member for Bolton, South-East, who made an excellent speech. He explained the reasons for the measure and its scope with the current wording.

I want to flag up at this early stage some ways in which the Bill could be improved. The hon. Gentleman made it clear in reply to an intervention from me that he was seeking broad support for the Bill from all parts of the industry, and he has made a good fist of that at the first attempt. He said that he looked to organisations such as the Council of Mortgage Lenders for support, and he has broadly got it. However, some changes could do two things: reassure the Council of Mortgage Lenders about some of its concerns, while not making a material difference to the purpose of the Bill. I do not want to amend the Bill in a way that would neuter it or the purpose behind it. The principle is very good, but perhaps some amendments could be made that would retain the purpose but address some small concerns. I will go through those concerns shortly.

At the outset, it is worth considering unauthorised tenancies and why they arise. The hon. Gentleman mentioned that. In the case of people renting out properties without getting the mortgage lender’s permission, some might argue that we should abolish unauthorised tenancies so that tenants, whether authorised in the traditional sense or not, have general protection. However, it is worth pointing out, as the Council of Mortgage Lenders has done, that there is a good policy reason behind unauthorised tenancies. Without them, we could end up in a position whereby

“unscrupulous borrowers could blight the lender’s security by granting long term leases to tenants”

while defaulting on their mortgage, thereby leaving the mortgage lender in an impossible position.

The hon. Gentleman’s strategy is right. It recognises the fact that we cannot give blanket coverage to tenants, whatever their circumstances. The provision to grant a two-month stay of execution is a sensible compromise, which protects the lender and the tenant.

The Council of Mortgage Lenders makes some other detailed points, which I want to raise. I hope that the hon. Gentleman will say whether he is minded to support those points through amendments in Committee or on Report and perhaps explain, if he is not, why not, because some of the points that the Council of Mortgage Lenders raises are worth further scrutiny.

The first point relates to trying to get a two-month delay. At what point should people apply for that two-month delay? As the hon. Gentleman said, the Bill does not set out whether that should happen at the possession hearing stage in court or at the warrant stage. As I understand it, the Bill would allow application for the two-month delay at any stage. The reason that he gave was that letters sent before the possession hearing might not be received or opened, so people would not be aware of the process that was under way. It is therefore important that there is flexibility in the system, to make it clear that if someone only finds out at the warrant stage, they still have an opportunity to do something about it. I accept that point.

Traditionally, buy-to-let tenants have two months before the notice kicks in. We discussed whether to apply that to the Bill, but the hon. Gentleman will have heard me say that the notice period is up to two months, so that if the tenant voluntarily gives up possession of the property, the sale can proceed. There is therefore a counter-balance, but the evidence from the charities working in this area is that most tenants are genuinely unaware that this is happening to them. I do not see any way around that. We have discussed this quite a bit with the Council of Mortgage Lenders, and we are prepared to meet it again. However, we believe that the Bill in its present form is the best we can achieve to protect the interests both of tenants and lenders.

I accept everything that the hon. Gentleman says, and I do not think that there is any difference between us on what we are trying to achieve. The issue is more about minor detail, and how we reach the goal that we all wish to reach. However, regarding the point at which people can apply for a two-month suspension, the hon. Gentleman made it clear that clause 1(5) would prevent someone who had plenty of opportunity to know about the possession hearing from not doing anything at that stage and applying for the two-month delay at the warrant stage. I am not sure whether the provision does the job adequately, as the unauthorised tenant could ignore the notice about the possession hearing and the initial hearing, and could wait until the lender is at the warrant stage before going to court. I am not sure that the safeguard that he thinks the Bill contains is strong enough to stop that happening.

I appreciate that people may not be aware of the issue, and I shall come on to the way in which we can be more certain that they are aware of the possession hearing. It would be better if the Bill made that clearer and people were aware of that stage. For example, a letter might be sent to someone by registered post, so that they had to sign for it. It would be clearly documented that they had received it and there would be no doubt about that. That would be helpful, particularly as the hon. Gentleman made it clear that the matter of people deliberately ignoring action at the first stage had to be tackled. The position should be made clearer in the Bill so that people could not just ignore the notice and wait until the final stage before doing something about it.

It is not fair for people to wait until the final stage to do something about it, as it means that the landlord who has defaulted on their mortgage will rack up more interest costs while the second hearing takes place and that the lender cannot get on with their business. It will also clog up the court system, because instead of one hearing, two will take place. Anything that can be done to try to speed up the process and prevent extra court hearings is a good thing. I am not suggesting that the hon. Gentleman should remove the flexibility in the Bill. All that I urge him to do, either in Committee or on Report, is consider amendments that make it clearer that if people are aware of the first hearing, they have to act at that stage, and cannot wait until the second stage. We should, however, retain the safeguard that if they are genuinely not aware of the first hearing, they can act later.

Secondly, while I accept what the hon. Gentleman is proposing, I am not entirely sure that the Bill does the job. He said that people can apply for only one two-month delay, and I agree wholeheartedly. However, I am concerned that the Bill does not make that clear.

I, too, was concerned about that. The hon. Member for Bolton, South-East (Dr. Iddon) discussed the reliance on the words, “a period”. By substituting the words “a single period”, we would solve the problem, and that might be something that could be considered in Committee to clarify the position.

My hon. Friend is right, and I agree wholeheartedly. He said that we should use the word, “single”, but I suggest that we replace “a” with “one”.

Perhaps we could combine the great talent on these Benches with that phrase. However, replacing

“a period not exceeding two months”

with “one period not exceeding two months” would put the position beyond doubt. As the provision is currently worded, there is still some doubt, because as long as the period lasts no more than two months, application can be made for more than one delay. The insertion of the word “one” would be extremely helpful, and I genuinely hope that the hon. Member for Bolton, South-East will consider that proposal as the Bill progresses.

Finally, I understand that the Council of Mortgage Lenders has raised the issue of the notice given to the tenant of the hearings. The Bill asks the lender to write to them to explain the process and the fact that there is going to be a possession hearing. My hon. Friend the Member for Rochford and Southend, East (James Duddridge) made it clear that there could be data protection issues, and I think that that may well be the case. I would not want the Bill inadvertently to stumble because it clashed with data protection requirements. The Council of Mortgage Lenders makes a good point in suggesting that it would be helpful if the notice to the tenant of the possession hearing came from the court, rather than from the lender. That would be beneficial for two reasons: first, it might avoid the data protection issues that could make the mortgage lender nervous. Even it were proved that it was not in breach of data protection laws, there might be a slightly chilling effect, as it might avoid doing something because it did not want to risk becoming involved in data protection issues. If the court service sent out the letter, that would certainly help with that problem.

Secondly, such a letter would help to ensure that people are aware of the proceedings that are under way. A letter sent to the tenant by the court would be much more likely to be opened and carefully scrutinised by the recipient than a letter from, perhaps, a mortgage lender with whom the recipient has hitherto had no relationship. Again, I hope the hon. Member for Bolton, South-East accepts that that provision would in no way affect the terms of his Bill or the purpose behind it. It would not prevent people from solving the problem that they find themselves in, but it would improve the process in the Bill and make it more robust. It would ensure that people who find themselves in a terrible situation through no fault of their own, when they have done absolutely nothing wrong, as when unauthorised tenants are faced with eviction simply because of the relationship between the landlord and the mortgage lender, have the safety net that the hon. Gentleman is trying to provide.

I do not wish to go on, because as my hon. Friend the Member for Rochford and Southend, East said, we have other important business to get through. However, I hope the hon. Member for Bolton, South-East reflects on those points of detail—I consider them points of detail as opposed to points of principle—in our further consideration of the Bill. If we could introduce those minor amendments, we could have a Bill that everybody across the whole industry agrees with, and we could shorten proceedings at future stages of the Bill. Rather than spending time arguing over amendments that I would hope to table on Report, we could move much more quickly and see the Bill become law. I would like it to do so, because it would give important safeguards to people who find themselves in a difficult situation through no fault of their own.

The Bill would be an appropriate legacy for the hon. Member for Bolton, South-East, who has served his constituents and the House with great distinction.

I want to put on the record the fact that the Government wholeheartedly support the Mortgage Repossessions (Protection of Tenants Etc.) Bill, which has been introduced by my hon. Friend the Member for Bolton, South-East (Dr. Iddon). It would be hard not to support legislation that will help to reduce distress and disruption to households who rent in the private sector. The Bill will make the legal process substantially clearer for those tenants affected. It is positive and constructive and enhances protection for those people who rent privately and whose landlords have not requested or received lender consent to let.

As has been evident in the debate, the issue of short-notice eviction of tenants when their landlord falls into arrears and repossession action starts is by no means straightforward. It is legally complex. The gap in legal protection for tenants faced with that situation is not so much an oversight, but an historical result of myriad housing and mortgage laws pertaining to tenants.

My hon. Friend eloquently explained the problem and proposed a solution, and I do not intend to repeat what he said. However, I will say that it appears a no-brainer that the House should act to ensure that unauthorised private rented sector tenants are offered some form of legal protection. It cannot be right that a tenant enters into a tenancy agreement in good faith, only to discover that the lack of lender consent to let means that in fact they are unauthorised tenants with no rights or protections against the lender.

The Minister mentions tenants entering into an agreement in good faith, but how about tenants entering into an agreement in bad faith? For example, would it be possible, under the Bill, for an individual who is living in a property and having their property repossessed to take on a tenant in bad faith—perhaps a friend—further to delay the repossession order? I cannot quite see how we would avoid that situation of people taking on tenants in bad faith. If that is not covered, could it be dealt with in Committee?

I was going to make precisely the point that the Bill perhaps does not deal with a number of issues that could be addressed in Committee. One thing is clear: the core rationale behind the Bill is shared by all of us. My hon. Friend the Member for Bolton South-East himself said that there was a clear, conscious decision to make the Bill as discrete as possible to ensure its progress. That does not mean, however, that other related matters pertaining to it cannot be dealt with in Committee.

This time last year, the issue of unauthorised tenants affected by lender repossession action against their landlord was beginning to be drawn to public and media attention, for which I would like chiefly to thank the advice sector and organisations such as Shelter, Citizens Advice, Crisis and the Chartered Institute of Housing. I thank those organisations for the time that they spent working on ideas to address the issue, including in the joint report “A private matter?” which was published in March 2009.

I am not in the habit of guessing—I will leave that to others, who can do so in Committee.

In fact, the Select Committee on Communities and Local Government was ahead of the organisations I mentioned. A report published on 24 February 2009 identified the issue and called on the Government to produce guidance to stipulate how lenders should act when tenants are discovered in a property that they are repossessing. In addition, the Department for Communities and Local Government ministerial postbag started to receive details of individual cases in which tenants were suffering eviction at very short notice as a result of landlord repossession. Common themes included the lack of information available to the tenant, the complaint that no one would listen to tenants, and tenants’ great distress at needing to find an alternative home so abruptly. The hon. Member for Colchester (Bob Russell) alluded to the fact that some tenants find out that a property is being repossessed without being told themselves, which I do not advocate. Clearly, that situation did not seem right and needed investigating. As a result, my right hon. Friend the Member for Derby, South (Margaret Beckett) announced on 13 May 2009 the Government’s commitment to legislate at the earliest opportunity to provide better protection for tenants in repossession cases.

As my hon. Friend already mentioned, the Department issued a consultation over the summer, “Lender repossession of residential property: protection of tenants”, to which there were more than 30 responses. The responses recognised that short-notice eviction was a very real issue. There was equal recognition that action needed to be taken. I am pleased that a large number of local authorities responded to the consultation. They were extremely supportive of the need to ensure that tenants in that situation were given adequate notice to find alternative accommodation, and cited recent examples of properties being repossessed when tenants were living there. The problem is real and it has real consequences for people’s lives.

It would be remiss of me not to mention the lender sector, which also responded to the consultation document, either directly or via representative bodies such as the Council of Mortgage Lenders, which the hon. Member for Shipley (Philip Davies) mentioned, the Building Societies Association, or the Financing and Leasing Association.

In those representations, was there any recognition, by any of the money lenders, that they, in part, were responsible for some of the cases because they failed to have due diligence regarding those to whom they were lending money?

The honest answer is that I am not aware of that, and I am happy to write to the hon. Gentleman on that point. However, we know that over the past 18 months due diligence has not really been at the forefront of the minds of bankers and financial institutions.

The Minister mentioned councils and their attitudes when people become homeless. Would he expect a decent council to act with compassion rather than dig its heels in and enforce its statutory powers, especially when the vulnerable person who is facing homelessness—I have in mind a case in Castle Point at the moment—is disabled and has not acted as well as they might have done in responding to the council because of a mental illness or some other problem? In such a case, would the Minister expect a council to be compassionate and do everything that it can to ensure that someone in that vulnerable position is not made homeless?

The hon. Gentleman makes a good point. In these difficult times, the Government would expect compassion to be at the forefront of the minds of those in positions of public authority. The Government have made great efforts to ensure that compassion is instituted in several organisations. That is why—the hon. Member for Rochford and Southend, East (James Duddridge) spoke about some of the challenges that exist—the Government introduced the Real Help Now campaign, which is accessible via direct.gov.uk and provides £130 million extra funding for free face-to-face debt advice.

Lenders have also agreed not to repossess for three months while forbearance is discussed. Anyone with problems needs to engage with their lender as soon as possible. They will probably find that lenders are not as eager to repossess as has been assumed. Since April 2008, some 330,000 homeowners have benefited from this Government-initiated help and advice.

The consultation is a worthy exercise and I wish to tease out the level of Government involvement. Why, given that the consultation exercise closed on 14 October, have the Government not yet issued a response? Surely that would have been helpful before today’s debate?

I am not fully aware of the reasons for that. I hope that I will address some of the issues about which the hon. Gentleman is concerned in my speech, and I will write to him in due course on the consultation.

No lender deliberately intends to evict a tenant from a property against which they are taking repossession action. Many lenders, rightly, are sympathetic when a tenant becomes known to them and engages with them, and they can take account of the tenant’s circumstances and allow them a period to find somewhere else to live. That reinforces the point made by the hon. Member for Castle Point (Bob Spink) that compassion is crucial in this matter.

Obviously, I am not familiar with the individual case, but we have made our view clear. In difficult times, a decent society would wish to be compassionate to people in difficult circumstances. I am therefore pleased that the Government’s interventions and programmes have meant, for example—this is a factual point and not party political—that the number of repossessions is half the rate it was during the last recession. I note the interesting statistic that in 1992 quarter 1 homelessness due to mortgage arrears was running at 12 per cent., but in Q3 of 2009 it was 3 per cent. Intervention helps, and compassion is at the core of that.

Unfortunately, the lender is often unable to help because they are reliant on the tenant making themselves known to them. For obvious reasons, that is not always possible and it can often happen too late in the process. In addition, unless the Bill is enacted, there is currently no official mechanism for tenants to engage with the court repossession process and no opportunity for the judge to take them into account when making a decision on repossession.

The process of lender engagement in this issue tends to be ad hoc and certainly tenant experiences are not universal. Worried and vulnerable tenants need some clarity about the steps that they should take to prevent themselves from being made homeless at short notice. My hon. Friend’s Bill would achieve that.

I recognise some of the concerns raised by the lender sector about the Bill in response to the consultation document. While the need for tenants to have some opportunity to engage with the repossession process is key, it is recognised that some lenders feel the Bill to be complex and want to ensure that it is proportionate to the scale of the problem. That is a reassurance that my hon. Friend has been keen to give, and I can assure those stakeholders and the House that the Bill is indeed a proportionate response to the problem, given that it is clear that the various stages can be invoked only by an unauthorised tenant under threat of short-notice eviction as a result of landlord arrears and repossession. I would also argue that a Bill with only two substantive clauses is relatively simple. I understand that the secondary regulations also give further reassurances on processes that the tenant and lender will need to go through.

I asked about the regulatory impact assessment, although I decided to stay in my place rather than run to the Library to get a copy. Did the Department write or influence the RIA? If so, that would reassure me.

I can assure the hon. Gentleman that the Department did all that he would expect to ensure that full support was given to the Bill and to my hon. Friend.

What strikes me most about short-notice eviction is the injustice of it. The majority of private rented sector tenants are good tenants who pay their rent on time. The fact that they may have lived in the property for some time, blissfully unaware that their landlord has any financial concerns until the bailiffs turn up on their doorstep, is shocking. One can only imagine the distress that that causes, not to mention the disruption to normal life and likely financial hardship incurred as a result, through no fault of the tenant at all.

It is unfortunate that owner-occupier landlords, either through inexperience or poor business decisions, get themselves into a mess and are unable to pay their mortgage. Worse still is the worrying number of landlords who do not actually use the rental income received from tenants to service the mortgage debt. It is hard to believe that that is the case, but unfortunately it is too often true.

In endorsing the Bill, the Government are showing our commitment to supporting the professionalism of the private rented sector. I note that the National Landlords Association and the Residential Landlords Association have supported the Bill’s objectives. That speaks volumes. Landlord organisations recognise that short-notice eviction of good, rent-paying tenants flies in the face of all the good work that they have been doing to ensure that the private rented sector is a professional and competent one, so that to live in such a home is seen as an active choice rather than a second-rate alternative to social housing or home ownership. The National Landlords Association and the Residential Landlords Association do not want unprofessional landlords operating in the private rented sector any more than tenants do.

The Government stand by my right hon. Friend’s commitment to legislate at the earliest opportunity. This Session’s timetable has put pressure on the legislative programme. The Bill introduced by my hon. Friend neatly helps the Government to fulfil the commitment made, especially as I can assure the House that it addresses many of the concerns raised by respondents to the Department’s consultation.

Proceedings interrupted (Standing Order No. 11(4)).