The Mortgage Repossessions (Tenant Protection) Act 2010

The Mortgage Repossessions (Tenant Protection) Act 2010 ("the Act") has now been passed. The aim of the Act is to provide protection to unauthorised tenants where a tenancy has been granted by a borrower, but without the lender's consent. In some instances, if a borrower landlord had defaulted on a loan and a lender repossesses the property, the first the unauthorised tenant becomes aware of the possession proceedings is when a court bailiff turns up at their home to enforce the warrant for possession giving the unauthorised tenant very little time to find a new home.

By comparison, usually with a buy-to-let mortgage, the tenancy will be binding on the lender. If the lender wants vacant possession, it has to comply with the provisions for termination under the tenancy agreement and usually the tenant will have two months' notice.

The Act is intended to make sure that unauthorised tenants are not given very limited notice that their home is about to be repossessed. The Act provides that:

The unauthorised tenant will have a right of audience at the possession hearing. In practice, if the tenant attended the possession hearing, a district judge would usually let them be heard, but this now ensures that they have a formal right to do so. On application by the unauthorised tenant, the court has the ability to postpone the date for delivery of possession for a period not exceeding two months. Once a possession order is made, the court has the power to stay or suspend the enforcement of the possession, for a period not exceeding two months, if the court did not make an order at the initial possession hearing. The unauthorised tenant can only do so if they have asked the lender to give an undertaking in writing not to enforce the order for two months and the lender has not given this undertaking. Once the lender obtains a possession order, the order may only be enforced if the lender has given notice of any prescribed step and only after the end of a prescribed period. At present this prescribed step and...