The 'Mortgage Repossessions (Protection of Tenants etc.) Bill 2009' had its second reading in the House of Commons last Friday.
The Bill has major implications for lenders, who could be affected by unnecessary administrative burden and therefore cost.
TLT partner and head of banking litigation, Jonathan Hoey commented: "If this Bill becomes an Act it will burden lenders with yet more administrative obligations. This may cause added delay and therefore cost to lenders and potentially borrowers.
“The legislation is designed to cover a very limited number of situations where a lender takes possession and finds that there is a tenant living in the premises contrary to the terms of the mortgage. In our view the Bill constitutes more unnecessary regulation - essentially, a sledgehammer to crack a nut.
“The proposed legislation will apply in standard residential mortgage possession actions in which the mortgaged property is tenanted but the lender is not bound by the tenancy because no permission for it was given.
“When the lender applies for an order for possession, the court can postpone the date for delivery of possession for up to two months. In addition, even if the court has made an order for possession which has not yet been executed, the tenant can still apply to suspend execution of the order for up to two months.
“In deciding whether to exercise its powers, the court must have regard to the circumstances of the tenant, the nature of any breach of the tenancy agreement and whether the tenant might reasonably have avoided or remedied the breach
“This Bill places on lenders the unenviable prospect of being made to wait longer to obtain their security whilst persons not approved by them continue to live in the property, without paying rent or maintaining the security."
Date: 3rd, February, 2010
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