Tenants gain breathing space from the bailiffs: Mortgage lenders to be told to give advance notice of repossessions

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DRAMATIC changes in the way lenders deal with repossessions will be introduced in the autumn by the Lord Chancellor.

Tenants who face eviction because their landlord fails to pay the mortgage will at long last get some protection. And owner-occupiers will have to be provided with much more information from the lender to help them defend repossession actions.

Hundreds of innocent tenants are made homeless every year because landlords have defaulted on their mortgage.

The lender is not aware of the tenants' existence. Frequently, the first a tenant knows of a problem is when the bailiffs knock on the door with an eviction order.

In 1990 we highlighted the predicament of Nigel Woodward, a tenant of a property in Hertfordshire.

He got home from work one night and found a note from the landlord to say that the building society was repossessing the property in two days.

Mr Woodward went to Shelter, the housing agency. The landlord could not be contacted and, finding the lender proved to be a problem.

At 10.15 on the morning of the repossession, Shelter rang the bailiff's office at the court. It was 10 minutes too late.

The bailiffs had just left to change the locks. Mr Woodward was locked out of his own home. He did get back in, but the lender only agreed to hand him a key after a court hearing.

The lender, which initially did not know of his existence and evicted him when it did, has since sold him the property. He is now a proud owner-occupier.

'They tried to sell it, but no one wanted to buy it with me as a sitting tenant,' said Mr Woodward. 'So, I bought it.'

The Independent has highlighted numerous cases of tenants who were under threat of eviction through no fault of their own. The cause was taken up by David Porter, MP for Waveney.

Three years later, the Lord Chancellor has finally come up with his answer to the problem.

Under the new rules, lenders must send a notice to 'the occupiers' at the address of the property at least 14 days before the court hearing to repossess the property.

As a further precaution, the lender must certify to the court that this procedure has been carried out.

Mr Porter said that the notification requirement 'must be good news'. 'I am sure it has come about as a result of public pressure,' he added.

Roy Brown, head of secured lending at the solicitors Hamlin Slowe, said that if tenants are warned earlier, it will give them the opportunity of finding alternative accommodation prior to eviction.

'Or they could apply to join in the proceedings if they could establish a right to remain - for example, if the tenancy predated the mortgage advance,' added Mr Brown.

As far as owner-occupiers are concerned, the lenders will be obliged to supply both them and the courts with much more information about the amount of the mortgage debt, the arrears and how they have built up, as well as any extras which might have been added to the loan.

Fiona Hoyle, the under-secretary of the Council of Mortgage Lenders, said: 'It will create a great deal of administration for mortgage lenders, but if it causes uniformity in the courts of what is required then it is beneficial.'

The more details the borrower has, the easier it is to defend the action. In return, however, borrowers have to complete an extremely lengthy questionnaire on their circumstances.

Mr Brown said: 'The information required from borrowers goes far beyond that required currently. It includes such hot potatoes as 'do you wish the court to consider whether or not the mortgage terms are fair?'.'

The whole purpose of asking for more information from the borrower and lender at the outset is to enable judges to make appropriate orders at the hearing, without the necessity for numerous and costly adjournments.

Time alone will tell whether the Lord Chancellor has got it right.

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