The Government is examining whether it can offer better legal protection to tenants that face eviction from properties owned by banks and lenders. At present, some who rent buy-to-let properties have fewer rights and enjoy less protection than other private sector tenants. Where the courts grant an order for repossession of a buy-to-let property, a sitting tenant – unlike other private sector renters – cannot refer a dispute to the Private Residential Tenancies Board.
Recent figures from the Court Service – for the first half of 2015 – record a sharp rise in the number of repossession orders granted by the Circuit Court on buy-to-let properties. Those figures are set to increase further. However, whether the possession order secured is subsequently implemented is something that the person or company obtaining the order must then decide. Most mortgage contracts allow the lender – where the borrower fails to repay a loan – to foreclose and seize the property, and to do so without a court order. It means the overall number of actual property repossessions remains imprecise.
Nevertheless, the Government's concern is with how any further rise in property repossessions may add to the problem of homelessness. In this regard, tenants in the buy-to-let sector, who are less well protected, are likely to be worst affected. The Department of the Environment and the Department of Finance are considering "duty of care" legislation, which would prohibit banks and lenders evicting a tenant who had no alternative accommodation. Quite whether this can be achieved remains to be seen, given the potential difficulties such legislation presents – not least on constitutional grounds. At present sitting tenants in buy-to-let properties may well be the last to hear about legal moves taken by banks and lender to secure repossession orders, as the issue is contested between lenders and landlords, and sitting tenants are mere bystanders.
The housing charity, Threshold, has assisted many in the private rented sector whose homes have either been the subject of repossession actions by banks, or have had receivers appointed to them. As Bob Jordan, the charity's chief executive has pointed out: "Tenants generally only become aware of the situation very late in the day and only after there has already been a court hearing". The charity has long sought changes to the Residential Tenancies Act to ensure that, where a bank or a receiver takes over a buy-to-let property, that they fully accept the responsibilities of a landlord. The Government is rightly concerned that in such circumstances some tenants could face eviction at short notice, and who may find themselves homeless. In the run-up to a general election the potential spectre of evictions dominating the headlines is something the Government will be anxious to avoid. It should as a first step amend the Residential Tenancies Act.