Skip to main content

Mortgage Repossessions (Protection of Tenants Etc.) Bill

Volume 504: debated on Friday 29 January 2010

Proceedings resumed.

I particularly support my hon. Friend the Member for Bolton, South-East in his endeavours to bring his private Member’s Bill to fruition because it sits neatly alongside the suite of actions that the Government have taken. One of those actions is worth mentioning. The hon. Member for Colchester talked about housing shortages. I am sure that he will welcome the fact that the Government have initiated a council house building programme once again. That is something that others will welcome too.

The Government took action, and took action early, as soon as it became clear what the impact of the financial crisis would mean for hard-working households in the UK. We have been proactive. We have introduced real help for people facing the threat of repossession, and we have introduced that help at every stage of the process. As I have said, that stands in stark contrast to the previous recession in the 1990s, when the Government took action after repossessions had peaked and the worst had passed. This Government have been proactive. We have put home owners at the heart of our response to the economic situation.

Let me once more highlight the actions that we have taken. We have invested £130 million in providing free face-to-face debt advice services between 2006 and 2011. As a result, over the past year more than 110,000 families have benefited from information and advice on their mortgage difficulties. We have reached agreement with the major mortgage lenders not to repossess a property for at least three months after an owner goes into arrears. At least 133,000 families are now benefiting from that tolerance from their lenders.

We now have a pre-action protocol in place, which means that lenders have to exhaust every possible option to keep a family in their home before applying for a repossession order. Even once someone is in front of the court, there is still Government help for them. We have doubled the funding for free on-the-day advice and representation for those in court. That can help households who access the support available to avoid the threat of immediate repossession in four out of five cases. For those households that have exhausted all avenues of help available, we have introduced the mortgage rescue scheme. However, Government action in the earlier stages of repossession means that few people currently reach that stage.

Many of my constituents have relatives who live in my hon. Friend’s constituency, and I have to say that they are constantly praising him. Today I want to join them in praising him. [Interruption.] He is so immersed in the debate that he is ignoring the praise that is being heaped on him—but they say that the best praise is praise given behind somebody’s back. I pay tribute to my hon. Friend, who after 13 years is standing down at the next general election, whenever that might be. His contribution to this House and to his constituents has been enormous. The Bill will form a fitting part of his honourable and distinguished legacy in this place. On behalf of all hon. Members and, I am sure, the citizens of Bolton, South-East, I would simply like to say that it has been a privilege and an honour to work with him.

The package of support that this Government have put in place to support households under threat of repossession in the current economic climate is comprehensive. My hon. Friend’s Bill to protect unauthorised tenants of repossessed landlords complements that package. I commend it to the House.

I begin by echoing the comments of other hon. Members and warmly thanking the hon. Member for Bolton, South-East (Dr. Iddon). He has made contributions to a number of things, not only as a dedicated and assiduous constituency Member since 1997, but as someone who has helped to improve our understanding of science in Parliament and, from my personal point of view, done excellent work as secretary of the all-party group on Pakistan, which I have the honour to chair. I also pay tribute to the coalition of organisations that have pushed for the Bill, which includes Shelter, Crisis, the Chartered Institute of Housing, Citizens Advice, the Residential Landlords Association and the Council of Mortgage Lenders.

The Bill is commendably short, with only four clauses, and it is an important step towards redressing the balance in favour of tenants, while protecting the position of mortgage lenders. Under the assured shorthold tenancy regime, all tenants should receive at least two months’ notice where their landlord requires possession, so long as the tenant is not in default. However, as we have already heard, it is currently the case that unauthorised tenants have limited rights when their landlord faces repossession. As we know, sometimes the tenants might not find out that the lender is repossessing the property until the last minute. There have been cases, for example, where the first indication is notification from the bailiff or, in some extreme cases, the bailiff turning up on the doorstep to take over the property.

In that situation, individuals and families are left with little or no time to find alternative accommodation and avoid homelessness, which cannot be fair. I believe that we have a moral obligation to put unauthorised tenants of a defaulting borrower on the same footing as others in the private rented sector. All tenants, subject to certain safeguards, including payment, should be able to require the lender to delay possession for a period of up to two months, so that they have a realistic opportunity to make alternative arrangements and find somewhere else to live.

I welcome the fact that the Bill has received Government backing, and I assure the House that my party is keen to see it progress and become law. We will do everything that we can to facilitate that. The Bill has received cross-party support and has been welcomed by all the major housing industry organisations. That is testament to the importance of filling the gap that exists in the legal protection for private tenants whose landlords are repossessed. For that reason, I want to put on record my disappointment at the Government’s failure to act sooner.

As early as May last year, in a Department for Communities and Local Government press release issued on 13 May, in response to the Rugg and Rhodes review and following a great deal of Conservative pressure, the Government announced their intention to legislate “at the earliest opportunity” to give unauthorised tenants more time to find alternative accommodation and avoid homelessness. However, the Government failed to take the opportunity to table amendments to the Local Democracy, Economic Development and Construction Bill, and nothing about this was to be found in the Queen’s Speech.

As we have heard from my hon. Friend the Member for Rochford and Southend, East (James Duddridge), the pledge to respond to the public consultation that concluded on 14 October has yet to come to fruition. I hope that the Minister will place in the Library a copy of the letter that he is going to write to my hon. Friend to explain why that is the case. Even the DCLG’s “Preventing Repossession” factsheet, published on 12 November last year, repeated the pledge that early action would be taken. Clearly, however, that has not happened.

I shall remind the Minister of what my party called for as long ago as February 2009. We asked the Government to address tenants’ concerns in the following ways: by immediately implementing an increased notice period of five to seven weeks for any court repossession hearing; by investigating how lenders could address their communications directly to tenants, rather than sending the usual bland “To the occupier” letter; by encouraging courts and lenders to allow tenants to be heard at repossession hearings; and by asking lenders to consider extending the notice period between a repossession order being made and eviction.

Is the hon. Gentleman suggesting that this private Member’s Bill is insufficient and should be expanded?

No, as is evident from my previous remarks. As the hon. Gentleman knows, we strongly support the hon. Member for Bolton, South-East. It is important, however, to put on record the fact that the Government have not acted with appropriate alacrity, as the Minister has said, and that my party was addressing these key issues as long ago as early 2009.

Will the hon. Gentleman take this opportunity to congratulate the Government on their swift action to help distressed home owners? The repossession rate is now 50 per cent. of the rate in the early 1990s. Is not that a great example of how this Government have been proactive and intervened rather than being sluggish, as he has suggested?

We could debate Government housing policy, but I suspect that that would be ultra vires to the debate. We have a degree of consensus, and I do not want to ruin it by wandering off into a party political debate, although I have to say that the Government’s record is not particularly strong.

I do not want to stray too far from the subject of the debate, but the issue of the number of houses available for people to rent—particularly social housing—is linked to it. Does the hon. Gentleman agree that the Government’s record on house building has not been good enough—

Order. I am afraid that the hon. Gentleman is straying wide of the topic of the debate, even though it is a Second Reading debate.

Thank you, Madam Deputy Speaker.

I believe that we can achieve consensus around the idea that both parties have perhaps not done enough work on the arcane legal and financial rules about, for example, residential investment trusts, which have been very successful on the continent and in north America. Perhaps all the parties need to suggest to the Treasury the idea that we need to increase provision in the private rented sector. If my party is fortunate to be elected to government, it might look at that issue.

Unfortunately, despite a consultation in the late summer months, substantive Government action to help unauthorised tenants was not forthcoming, in spite of our being in the midst of a deep recession, with an increased number of landlords defaulting on their mortgage payments. So we must now work hard to get this private Member’s Bill on to the statute book as quickly as possible. My hon. Friend the Member for Welwyn Hatfield (Grant Shapps) made a commitment to the hon. Member for Bolton, South-East on that some months ago.

The hon. Member for Bolton, South-East is right to draw to our attention the significant scale of the problem. A major issue here is that no data are available on how many unauthorised tenancies exist in England and Wales. Based on the Government’s own figures, it is estimated that 324,000 so-called RTL—residential-turned-let—households are currently renting from landlords without the lender’s permission. The tenants therefore have no rights and would be at risk of short-notice eviction if their landlord were repossessed. It is important to realise that there might be more unauthorised mortgages than anyone imagines, simply because borrowers with buy-to-let mortgages might not have gone through all the required formalities. We know that from anecdotal evidence.

We owe it to all such tenants to give them some security. The importance of this issue is laid bare when we consider that there could have been up to 3,000 cases of short-notice eviction in 2009 alone. The Government need to do more work on this, and to undertake quantitative and qualitative research to ascertain the scale of the problem. It might be appropriate for them to liaise with Citizens Advice on this issue. Even those lower estimates still represent a huge number of households, many with young children, being thrown out of their homes through no fault of their own.

When those young families are thrown out, the local authority is required to provide emergency housing at a cost to the public purse, and the tenants will often have paid their rent using housing benefit money. Does the hon. Gentleman agree that there should be a charge on the owner of the property to refund that housing benefit money to the public purse, and to pay for the emergency housing costs? Why should the public purse pay for these crooks?

The hon. Gentleman invites me to meander along a path that would take in a review of the housing revenue account and housing benefit. I shall resist the temptation to tarry with him, even though he is an expert on social housing, but I am sure that the Minister heard his suggestion.

The problem is aggravated by Financial Services Authority rules, which force lenders who are repossessing a property to market it as soon as possible and to obtain the best price that might reasonably be paid at the time.

On a related note, I should mention that the Bill is a welcome step for landlords as well as tenants. It is vital that we support the private rented sector in increasing general housing supply. This is particularly true where that would bolster social housing, which is under severe pressure from a social housing waiting list that has nearly doubled to more than 1.8 million families under this Government. That is a direct result of their failure to build enough social homes. The Bill will tackle a problem that the Residential Landlords Association believes brings

“the private rented sector into disrepute”.

More and more, the private rented sector is providing homes for the less well-off and those who cannot afford to buy, so it hardly helps the sector if tenants cannot feel secure in their homes.

The proposed approach should also be a welcome move for lenders. As the Royal Institution of Chartered Surveyors has pointed out, the two-month period will not add an excessive delay to the system and the lender will still be able to sell the property after that period. Banks are looking for certainty, and want to know that they will be able either to sell a property or to build up a portfolio of property for rent. The certainty of a two-month period will also allow a value to be placed on delays.

There are a number of issues with the drafting of the Bill that it is apposite to examine, and no doubt that will happen during the course of its passage. Parts of it need to be debated and scrutinised more closely. For example, we need to examine whether the Bill applies not only to conventional mortgage possession proceedings but to independent proceedings brought by a lender against a tenant. The hon. Member for Castle Point (Bob Spink)—my erstwhile hon. Friend—mentioned that point earlier. We should also ascertain whether it is appropriate that the notice to the tenant occupier should be sent by the lender and not by the court service. That point was raised earlier by my hon. Friend the Member for Shipley (Philip Davies).

We also need to ascertain how we can get past the data protection legislation issue, which the Council of Mortgage Lenders reports is a practical difficulty facing lenders. Also, would the Bill place an onus on unauthorised tenants who receive notice of possession to apply to court at the possession hearing stage and not to delay, knowing that clause 1(4) can be relied on?

All those issues are by no means insurmountable, and I am confident that the Bill can be refined and improved in Committee. We trust that the Government will pay due regard to the potential amendments to clause 1(4) suggested by the Council of Mortgage Lenders and the potential amendments to clause 1(7) suggested by the Residential Landlords Association. I got the impression that the hon. Member for Bolton, South-East is amenable to a fuller debate on those specific issues.

Given that repossessions are predicted to rise to 53,000 in 2010, this private Member’s Bill is an essential piece of legislation that has been necessary for some time. It has only just emerged that we have crawled out of recession, but that does not mean that the threat of repossession will go away for many in the private rented sector. Although the majority of tenants, particularly those in buy-to-let properties, should expect to be protected from sudden eviction by lender good practice, it is important that a legal minimum exists for those tenants who are not. As the housing market starts to improve, any recovery is likely to be followed by interest rate increases, which may make some mortgages more expensive. There is a possibility that that will lead to investors being unable to afford property and to more tenants having to leave their homes. Thus, as hon. Members have made clear, there may be perverse consequences to improvement in the housing market.

In conclusion, we strongly welcome this Bill—it is the right way to proceed—and it has genuine cross-party support and support in the housing community. I commend the hon. Gentleman and, if I may say so, this will be a fitting tribute to his dedication, hard work and knowledge in this area. In case we do not have the opportunity to cross swords before the general election, I shall now wish him well in his future life.

May I begin, as everyone else has done, by congratulating the hon. Member for Bolton, South-East (Dr. Iddon) on coming first in the ballot, which is an extraordinary achievement that everybody else envies, and on using that privileged position to introduce a Bill that is supported by the whole House? The impression that I have from today’s debate is that any difficulties that people might have with it will be on technical issues that ought to be dealt with in Committee.

The Bill is long overdue, and the Minister said that it was a “no-brainer” that we needed this legislation. I agree with him, but I wish the Government had come to that view and put this legislation into effect themselves some time ago. He referred to the many previous Housing Ministers who had promised, at different stages, to legislate at the earliest available opportunity. The hon. Member for Peterborough (Mr. Jackson), who spoke from the Conservative Front Bench, discussed the construction Bill, but I was hoping that at least we would see this legislation as an amendment to the Financial Services Bill. The Government seemed to be indicating to housing charities that that was what was going to happen, but at the last minute these provisions disappeared from that Bill and no such provisions were introduced. Thank goodness, therefore, that the hon. Member for Bolton, South-East stepped into the breach. However grateful I am, as indeed the whole House is, that he did so, I am not sure that it is appropriate to use a private Member’s Bill to get through legislation to which the Government say they are committed. Unfortunately, it was remiss of the Government that they did not legislate earlier.

I was pleased to hear the Minister say throughout his contribution that he is very supportive of the Bill, and the Department has supported the hon. Member for Bolton, South-East in drafting it. What I want to hear from the Government is not only that they are supportive, but that they will guarantee that parliamentary time is made available to ensure that the Bill gets on to the statute book, because it is long overdue and desperately needed.

As other hon. Members have said, charities such as Shelter and Crisis have been campaigning for this for a long time. Citizens advice bureaux have been warning for a number of years about the cases they have seen in which the first that tenants know about the likelihood of their losing their home is when they find that the locks have been changed. I do not wish to cover everything that other hon. Members have said, given that we are all broadly supportive of the Bill. However, it is worth picking up on a couple of the points with which I particularly agreed.

The hon. Member for Bolton, South-East explained the difficulties for landlords and why they may sometimes not tell their mortgage provider things. It is worth our understanding why that might happen in order to understand how as many as 300,000 tenants may be in unauthorised tenancy agreements.

Does my hon. Friend think we could examine that particular point in Committee, because when a local authority provides housing benefit to somebody in a private tenanted property it needs to be assured that the tenancy is legitimate under the laws of the land?

My hon. Friend talked earlier about seeking such money back from the landlord. Unfortunately, if we were to take that approach all that would happen is that we would speed up the process of repossession. If a landlord is already having his house or flat repossessed because he is unable to pay the rent, attempting to claw back the money that has been paid in housing benefit would not really work. I understand the point that my hon. Friend is making about ensuring that the tenancy is legitimate and the authorisation appropriate, but I am not sure that this Bill is the best place to do that. I hope that the Bill will go through Committee as quickly as possible and get on to the statute book.

I encourage anybody who sits on the Committee to concentrate on the Bill, because I do not want any excuses from the Government about delay, as the Bill might thus not become law. If lots of extraneous amendments are tabled to important provisions, that could be used as an excuse when the Council of Mortgage Lenders later decides that it is getting cold feet about the Bill and the Government then say that they do not have parliamentary time available. That is my greatest fear. I suspect that such a situation might be the reason why these provisions did not end up in legislation earlier this year or in the Queen’s Speech; I suspect that the Council of Mortgage Lenders decided to throw its weight around and the Government said, “Do you know what, we will hold off doing this.” Let us not provide the Government with any excuse for not supporting the Bill.

It is iniquitous that a tenant who has fulfilled all their obligations should find themselves in a position where they may lose their home. It is difficult for someone who is renting to ask to see details of their landlord’s arrangements with their mortgage provider; that is not something one would ever expect a tenant to do, so such tenants take their tenancy in good faith. The hon. Member for Shipley (Philip Davies), who is no longer in his place, talked about tenancies that are not given in good faith. I have to say to him that a two-month delay is not significant in the grand scheme of a process of repossession, and I am not sure that it is a reason for not supporting the Bill’s progress.

I hate to correct the hon. Lady, but I was the one who made that point and, before doing so, I made it very clear that I fully support the Bill.

I thank the hon. Gentleman for his clarification and I am sorry for not recognising that it was he who made that point. It has been a long morning and we are only on the first Bill.

The other point that was made well by a number of hon. Members was that the “notice to occupier” is extremely unlikely ever to get read. Anyone who has lived in an area of high mobility, even if they are an owner-occupier, will be aware of the sheer weight and volume of paper that falls through the letterbox—that applies not only to Liberal Democrat target areas. Plenty of leaflets and notices to occupier that come through letterboxes simply get ignored or, at best, go into the recycling bin. What the Bill does well is to find a practical and simple solution to ensure that tenants should just get the appropriate notice period set out in their tenancy agreement.

In his interventions on the Minister, my hon. Friend the Member for Colchester (Bob Russell) asked whether the reason why we found ourselves in this position was the lack of affordable housing. I think I agree with him, up to a point. Many people live in poor quality, private rented sector accommodation because of a lack of affordable housing. However, part of the reason we find ourselves in this position is that the private rented sector has not been put on an equal footing with other forms of housing. It would be a better and healthier thing for the market if the private rented sector was treated not as a stop-gap between affordable housing for rent and home ownership, but as an option that should be supported to ensure that we have the highest quality and choice available for all.

One point that the Residential Landlords Association made well in its briefing on the Bill is that if tenants find themselves in a position where they might lose their home without being given any kind of notice period, it undermines both the landlords’ ability to provide housing and the reputation of the private rented sector. I meet people in my constituency who are on the housing waiting list and could afford to rent privately, but they are afraid of the private rented sector because of the lack of stability. There are also other issues about quality, but this is not the place to deal with them.

Stability is a particular issue for people who have families and those who do not think that their income will go up significantly over the next five years. Those who are in a job in which they have already reached the ceiling on their income want to know that they can keep their home. If the Government’s strategy is to support the private rented sector, it is essential that we deal with the issues that arise if tenants find themselves without a home with no notice period whatsoever.

In conclusion, I am extremely supportive of this Bill. I have campaigned on this issue for some time and have questioned most of the previous Housing Ministers on it, urging them to bring forward this legislation. I congratulate the hon. Member for Bolton, South-East on promoting this Bill. It is a fitting tribute to all his work and commitment. What an amazing achievement it is to have two Bills on the statute book from one’s time in Parliament. I hope that the Minister will grant the hon. Gentleman’s wish and that of the whole House and ensure that parliamentary time is made available for this Bill. We do not want any excuses from this Government that will allow the Bill to fold. The House is very supportive of it and it must go through.

With the leave of the House, I want to thank all Members in the Chamber this morning and who have supported this Bill, as well as the political parties, in general, for supporting it. It is pretty obvious that this is a desperately needed piece of legislation and we have got that point across.

I want to refer to some simple points made by one or two Members. First, I can assure the hon. Member for Castle Point (Bob Spink), who unfortunately could not remain in his place, that the Bill will cover those tenants whose problems he raised. If lenders take independent proceedings against tenants, those tenants will be covered by the Bill. I thank the hon. Member for Rochford and Southend, East (James Duddridge) for his support, too, and I can offer him a place on the Committee, if he is willing to accept it, so that we can explore a little further the issues that he mentioned this morning. I can assure him, too, that the Bill protects only assured or Rent Act 1977 tenancies; and, of course, holiday lets are excluded from those tenancies. I regret that I can confirm what I said earlier: those tenancies are not covered by the Bill.

I thank the hon. Member for Shipley (Philip Davies) for mentioning the concerns raised by the Council of Mortgage Lenders. He mentioned some technical issues and I think that the best way of dealing with them, especially since he has not been able to remain in his place, is to promise to write to him about all those difficulties and to offer a meeting with him, too. I thank the House for everybody’s support this morning.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).