Memorandum by Tom Parkinson (CRED 21)
SUMMARY
It is currently possible for tenants in the
UK to be evicted without any notice when default on the part of
the landlord causes their home to be repossessed. The evidence
below details:
— the circumstances in which eviction
without notice can occur;
— why the issue is relevant to this
inquiry; and
— why closing the loophole in the law
that allows for eviction without notice is of extreme urgency
if thousands of families and individuals are to be spared from
abject misery.
1. MY OWN
EXPERIENCE OF
EVICTION WITHOUT
NOTICE
1.1 Two years ago, court appointed bailiffs
arrived at my door and forced myself and my housemates to leave
the house we had paid the rent on for the previous year and a
half. We had no idea that our tenancy was insecure. After desperate
negotiation and with great reluctance, the bailiffs granted us
one hour to remove our belongings.
1.2 Our landlord, who had previously lived
in the house, had not paid the mortgage for several months, we
had paid him the rent but he had simply pocketed while getting
himself further and further into mortgage arrears.
1.3 About six months previously we had,
by pure chance, discovered that he had defaulted on the mortgage
so we contacted the mortgage company to request that they notify
us if it happened again. This they agreed to do.
1.4 The landlord owned another home and
a business that appeared to be healthy. He showed all the signs
of being solvent and, after a frank and open discussion, he showed
us proof from the mortgage company that he was no longer in arrears.
We had good cause to think that his defaulting was a one-off.
Furthermore, the promise from the legal department of the mortgage
company to tell us if it happened again meant that we assumed
we had good cause to feel that our tenancy was secure.
1.5 In the event, though, neither the landlord
nor the mortgage company gave us any indication at all that we
were about to be evicted.
1.6 The estate agent who oversaw the eviction
told us that our situation is common. He regularly finds that
a repossessed property has sitting tenants who are unaware that
the eviction is pending. All of them are exactly the same circumstances
as ours. A few days prior to our eviction he had overseen the
eviction three young women, one of whom had a baby. The landlord—who
had similarly pocketed their rent, failing to tell the women that
the house had been repossessed—was their uncle.
1.7 As tenants we had a right to be a party
at the repossession hearing. After our eviction we were told by
the court that, had we attended the hearing, repossession would
likely have been delayed by several weeks in order to allow us
to find alternative accommodation. Of course, we had no idea that
the repossession hearing was taking place.
1.8 In summary, tenants have a legal relationship
with the landlord and the landlord has a legal relationship with
the mortgage company. If the property is repossessed and the landlord
is taken out of the picture, the security of tenancy—established
in law for all other cases—disappears. This is the only
situation wherein fair notice does not apply. In every other context—homeowners,
council tenants, private renters, even squatters and excluded
occupiers—there is a well-defined legal right to a fair
notice period before eviction. These protections are an essential
safeguard against destitution making it extraordinary that in
one—far from exceptional—circumstance, they do not
exist at all.
2. TENANCY AND
RECESSION
2.1 The last few years saw a huge increase
in the buy-to-let mortgage market. Encouraged by fast rising property
prices, mortgage availability, tenant demand and media success
stories, many more private individuals have become landlords.
In 2007, 2.5 million homes were rented from private landlords:
an increase of 40% in six years.
2.2 Many of these landlords will have had
their financial security threatened by the credit crunch. Like
anybody else, part time landlords can get into difficulty when
they lose their jobs. But, having borrowed heavily to finance
the ownership of a second property, such new landlords will often
be particularly vulnerable to recession—and especially to
the tightening up of loan terms in the frozen mortgage market.
(Indeed, the recent nationalization of Bradford and Bingley was
in large part forced because the bank was exposed to the buy-to-let
investors who are already showing increasing rate of defaulting
and then handing back their keys.) Anecdotal evidence from a local
estate agent concurs that buy-to-let properties are being repossessed
at a vastly disproportionate rate.
2.3 The remit of this inquiry is to discuss
"measures to help existing and prospective homeowners affected
by the credit crunch". Naturally, you will want to assess
the urgent situation for homeowners facing repossession. But when
owners of multiple homes, used as buy-to-let properties, face
repossession, the situation for their tenants is even more desperate—because
of their distinct powerlessness to do anything about it, and their
lack of any effective right to be forewarned. If, as I assume,
your enquiry is to focus on the repossession of those homes which
will cause most misery in the credit crunch, then it must consider
measures to protect private tenants from repossession.
2.4 To the extent that the new rules announced
by the Prime Minister on 22 October 2008 give all properties greater
protection form repossession, tenants of private landlords will
also be more secure. But the changes do nothing to protect tenants
in the circumstances outlined in section one.
3. THE EFFECTS
OF EVICTION
WITHOUT NOTICE
3.1 Eviction is normally subject to at least
four weeks' notice, if we had been granted that, we would have
been spared devastating misery. At the risk of stating the obvious,
our enforced and summary homelessness plunged us into a period
of intense hardship, the intensity of which would have been mitigated
exponentially by a period of notice. This in spite of the fact
that the three of us were young, healthy and capable men with
a large social network of friends we could call on for help.
3.2 Those most vulnerable to eviction without
notice are often the least able to cope with its impact. The effects
of homelessness have been well documented elsewhere but it is
essential to bear them in mind when considering this issue.
3.3 The legal department of the mortgage
company acted in a way that—having thought deeply about
it since—can only be described as immoral. They were acting
within the law though, and they were under no legal obligation
to give us any more time or assistance—even though we had
asked them to keep us informed. There is no more compelling case
for legal protection.
3.4 The relationship with our community
was idyllic, every one of our neighbours had been in our house
over the previous week. We freely shared access to our garden
and our neighbours to the right, and the neighbour to the left—the
Imam of the local mosque—entertained our guests the previous
night by singing Sufi songs. The whole community was more cohesive
and happier on account of such neighbourliness. A huge amount
of energy was invested in cultivating it. It's destruction was
just one of the incalculable things destroyed in an instant by
the eviction.
4. CONCLUSIONS
AND RECOMMENDATIONS
4.1 Both mortgage companies and bailiffs
should be legally obliged to inform tenants of impending repossession
with a fair notice period.
4.2 The costs of obliging mortgage companies
and bailiffs to inform tenants of impending repossession are insignificant
compared to the misery and destitution caused by eviction without
notice.
4.3 In our case, we were simply unlucky
to have found ourselves with a crooked landlord: nothing would
have altered his actions. My continued ire, however, is reserved
for the lawyers of the mortgage company who reneged on their agreement
to keep us informed if our landlord defaulted on his mortgage
again.
4.4 The only people who can be legally evicted
without notice are those who play no part in the circumstances
that cause the eviction.
4.5 Eviction under any circumstances is
a tragedy, to evict without notice is unconscionable. In all cases
it should be incumbent on the mortgage company (or whoever is
serving the eviction) and the bailiffs to prove that they have
served notice and without that proof, eviction should be illegal.
October 2008
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