I have found myself unaccountably lethargic post-lunch, so when the Chief put us on to the new DCLoG consultation document on “unauthorised tenancies” I jumped at the opportunity to post on it. It’s a beautifully produced document with lots of pictures, about a small but immensely important issue: a borrower, in breach of the mortgage conditions, creates a tenancy of the property; during the currency of that tenancy, the lender takes possession proceedings (or just possession, eg voluntarily); the lender, on standard principles of property law, is not bound by the tenancy; but what should happen to a borrower’s “tenants” who can otherwise be evicted on short notice? Francis’ excellent post on the 50th update to the CPR pointed out the changes made in terms of notification to the occupiers. But DCLoG had already committed itself to taking action – which represents a major success for the campaign run by the CAB, Shelter, Crisis and the CIH (see their document, A Private Matter, which is liberally quoted in the CP, and for which congrats from me). The CP estimates (and there can be no precise figure) that there are around 2-3000 tenants pa in this position (para 1.17), and sets out three objectives for the proposal, that they should be practical, proportionate and fair.
The resulting options are fivefold, although really there is only one. Option 1- do nothing – is discounted for obvious reasons (ie the government has already declared its intention to change the law). The government’s preferred option is option 2 (and strongly preferred to the extent that the three others are seen as possibilities in tandem with option 2 – see para 3.6). Option 2 is this: Give the courts a power to delay possession for unauthorised tenants. That power would be for two months on a tenant’s application to, and adequate representations at, court in the possession proceedings. The policy benefits are obvious to DCLoG: “It would also encourage tenants to attend court and become a part of the process, and provide a mechanism for early direct contact between the lender and any tenant, both of which are highly desirable”. It is recognised that this may still leave problem issues – where the borrower is in breach of an SPO and the lender takes possession; voluntary repo’s; and where the tenant doesn’t open the mail.
These issues lead into the three alternative options, of which the favoured one appears to be option 4: New notice of intention to enforce possession, with a mechanism for unauthorised tenants to apply for a delay of enforcement. Basically, the lender sends a notice to the occupier when it intends to enforce its right to possession. The notice would give the tenant 14 days to apply to the lender for a two month delay in the eviction. Now, in principle, that’s not a bad idea, but it does require us to trust the lender and, when it comes to lenders and possession, “trust” is not something I necessarily have in lenders, who in this case would also be required to decide if the claim was genuine or not (with a right of appeal to the County Court).
My other concern about these proposals is that, although they are undoubtedly well-meaning, how many tenants are really going to make those representations?
DCLoG also sets out the work it is doing behind the scenes, including promoting the use of receivers (although readers may also be interested in J’s post on Horsham v Clarke and Andrew Dismore’s 10 minute rule Bill on this point), clarifying advice from the FSA and CML. All-in-all, a fair bit of back-slapping, although whether the same can be said of DCLoG’s mortgage support scheme is up for grabs (how many successful applications have there been?).