We have made good progress in taking action to protect private tenants affected by landlord repossessions. Following consultation during the summer, legislation to address concerns will be taken forward this Session through a Private Member’s Bill.
My Lords, I thank the Minister for that positive response. It is good news that a Private Member’s Bill will take forward the intention to give some protection to innocent tenants who are evicted without any notice because of their landlord’s mortgage arrears. On the back of the campaigning by groups such as Citizens Advice, Shelter, Crisis and the Chartered Institute of Housing, will he consider whether the Financial Services Authority could have its arm strengthened so that, instead of only issuing guidance on these matters, it might require lenders to behave rather better in these circumstances?
My Lords, I welcome the noble Lord’s support for the Private Member’s Bill, which provides that, if the lender seeks a possession order and the unauthorised tenant applies to the court, the court can postpone the date by which the tenant must leave for up to two months. A framework of protections through FSA regulation is in place at the moment, but the FSA has set in train a mortgage markets review which is out for consultation. The consultation closes in mid-February. Perhaps that will be an opportunity to press the point that the noble Lord raises.
My Lords, the Private Member’s Bill is good news. I hope that the Government will not only support it but give it sufficient time to become law. Has the Minister considered encouraging or forcing the lender to appoint a receiver of rent, which would allow rental payments to continue to be made directly to the lender? The receiver of rent would then technically become the agent of the borrower in default, allowing the tenant to continue in the property.
My Lords, on the first point, yes, absolutely, the Government are fully behind the Private Member’s Bill and we will do all we can to assist its passage in this Session. I hope that we have a shared endeavour across the House on that matter.
The noble Earl suggested a receiver of rent. The Bill provides that if the lender chooses to collect rents from an unauthorised tenant in the two months’ notice period it does not constitute the creation of any tenancy or obligation between the lender and the unauthorised tenant. I am not sure that what the noble Earl proposes would in any event be precluded, but I am happy to look into it further and write to him.
My Lords, does the Minister not agree that the justice of the case demands something rather more than a postponement of the making of a possession order? Would not almost all such tenancies have been created with the consent of the lender? Since the lender, therefore, has concurred in the creation of this legal interest, is it not both legally logical and socially just that there should be full recognition of that interest on the part of the tenant?
My Lords, we are dealing here with situations where the tenancy has arisen without the consent of the lender; that is the problem that the provisions try to address. With buy-to-let mortgages, for example, there would be a presumption that there would be a tenant, but this legislation particularly addresses situations in which a tenancy has been entered into by the owner without the consent of the lender. It is in those circumstances that, currently, tenants can be evicted at very short notice. That is the problem being addressed by the Private Member’s Bill.
My Lords, to come back to the legislative timetable, would it not have made more sense to include this provision in the Financial Services Bill, to be assured that it would go through in a timely fashion? People are affected by this here and now. How many people does the Minister believe are affected by this problem?
My Lords, on the first point, the amount that can be included in any piece of legislation going through your Lordships' House and the other place is always a challenge, and judgments have to be made about getting through the legislation that is required. With co-operation across the House, there is no reason why we should not secure this Private Member’s Bill.
Our estimate of the number of people affected is between 2,000 and 3,000. Higher estimates have been promulgated, but we believe that those are not right because, in many cases, the property is available for letting, and repossession happens because a tenant is not paying the rent in the first place. In the case of buy-to-let mortgages, most tenants are authorised, because that is the presumption of the financial arrangement.
The Minister mentions that these are lettings without the lender’s consent. Does he have any evidence as to whether that is a deliberate ploy on the part of the landlord or is it simply lackadaisical and they have not bothered? I ask this question because we read that there are many thousands of tenants in social housing who are there illegally. The person who has a legal lease or tenancy from the local authority has vacated it and passed it on to someone else. There are many thousands of these. Is it a similar situation with the ones owned by people who are being foreclosed on—or does he not know?
My Lords, the noble Baroness is right. There are issues around illegal subletting of social housing, which is precisely why my colleague John Healey announced on 30 November details of a crackdown on social housing fraud. CLG is supporting that by providing around £4 million for 147 local authorities that signed up to tackling the challenge. As for the generality of the circumstances in which lenders are not informed, I imagine that there are a range of different situations in the private rented sector.