update: August 2009
The Civil Procedure (Amendment) Rules 2009 SI 2009 No 2092
CPR 50th Update October 2009
The Civil Procedure Rule Committee has made a number of amendments to the Civil Procedure Rules, Practice Directions and Pre-Action Protocols to take effect on 1st October 2009.
There are three amendments relating to mortgage possession claims:
CPR 55.10 Possession claims relating to mortgaged residential property
(a)for paragraph (2) substitute—
“(2)Within 5 days of receiving notification of the date of the hearing by the court, the claimant must send a notice to—
(a)the property, addressed to “the tenant or the occupier”; and
(b)the housing department of the local authority within which the property islocated.”;
(b)in paragraph (3), for “paragraph (2)” substitute “paragraph (2)(a)”;
(c)after paragraph (3) insert—
“(3A)The notice referred to in paragraph 2(b) must contain the information in paragraph (3) and must state the full address of the property.”; and
(d)in paragraph (4)—
(i)in sub-paragraph (a) for “he has served it” substitute “they have been sent”; and
(ii)in sub-paragraph (b) for “notice” substitute “notices”.
CPR PD55 Possession Claims
In the Practice Direction supplementing Part 55:
In paragraph 2.4, for “Supreme Court Act 1981” substitute “Senior Courts Act 1981”
After paragraph 5.4 insert “5.5 The Claimant must bring 2 completed copies of Form N123 to the hearing”
Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in respect of Residential Property
(1)For paragraph 6.1(1) substitute—
“(1)submitted a claim to—
(a)the Department for Works and Pensions (DWP) for Support for Mortgage Interest (SMI); or
(b)an insurer under a mortgage payment protection policy,
and has provided all the evidence required to process a claim;”
(2)In paragraph 6.1(2), after “for payment” insert “from the DWP or”.
(3)In paragraph 6.1(3), for “the insurance” substitute “a claim to the DWP or the insurer”.
Comment
The Rules are amended to ensure that all occupiers including tenants of any mortgaged property subject to possession proceedings are notified of the proceedings and hearing date. A new requirement is introduced obliging lenders to notify local authorities when possession proceedings are commenced. The steps, set out in the Mortgage Pre-Action Protocol, that a lender should take before starting a possession claim for mortgage arrears are expanded. The Protocol has also been amended to include a checklist for lenders to complete and file to show compliance with the Protocol. PD4 is amended as a consequence. The checklist will be published as Form N123.
Quarterly Statistics
The Council of Mortgage Lenders, the Ministry of Justice and the Financial Services Authority have each published updated statistics to reflect repossession activity.
The Council of Mortgage Lenders reports that the number of mortgage possessions fell in the second quarter of 2009, while cases of arrears levelled off. They say that a combination of factors has helped keep mortgage arrears and possessions in check, despite the recession, the most significant of which is that lenders are showing forbearance to borrowers where customers are trying to resolve their repayment problems and have a realistic chance of doing so. They also suggest that Government schemes are providing some help for borrowers in difficulty by promoting early communication between borrowers, lenders and debt advisers. However, the CML warns against complacency about the potential scale of future payment problems and says that while the economy remains weak and with unemployment still growing, arrears and repossessions are likely to rise in the second half of the year. The total number of repossessions amongst CML member lenders in the first half of 2009 stands at 24,100 which compares favourably the CML revised forecast for the whole of 2009 of 65,000.
The Ministry of Justice statistics, reflecting all mortgage possession claims in England and Wales, show that 26,215 mortgage possession claims were issued in the second quarter of 2009 – 32% lower than the second quarter of 2008, but 14% higher than the first quarter of 2009. 19,064 mortgage possession claims led to orders being made – 31% lower than in the second quarter of 2008 and 1% lower than the first quarter of 2009. Of these, 46% of orders made were suspended, compared with 48% in the second quarter of 2008 and 47% in the first quarter of 2009.The regional figures – showing activity in each court, by court region, generally show a uniform reduction in the number of possession claims issued compared to the same period last year of between 20 and 40%.
The Financial Services Authority has reported on the period 2007 Q1 down to 2009 Q1 following collection of quarterly data provided by mortgage lenders and administrators in their Mortgage Lending and Administration Returns (MLARs). These provide a range of information on lending activities including balances of all loans outstanding; new advances and commitments; unsecuritised and securitised loans; interest rates on loans; lending criteria including LTV and income multiples; lending to those with impaired credit histories and arrears and repossessions. They say that while the number of repossessions has gown significantly since 2007 Q3, the rise appears to have moderated.
Department for Communities and Local Government
Consultation on Lender repossession of residential property: protection of tenants
The Department for Communities and Local Government has published a Consultation paper which is likely to lead to new legislation to protect tenants of borrowers who face mortgage repossessions. The Consultation comes after a statement by the Housing Minister John Healey on 5th August 2009 in which he unveiled plans to give new legal protection to tenants vulnerable to being thrown out on the street with little or nor notice if their private landlord is repossessed. The Minister wants tenants in this position to be receive two months’ notice to vacate the property – giving them time to find suitable alternative accommodation. The Minister is also calling on lenders to use alternatives to repossession, such as appointing receivers to collect rent and manage occupied properties.
The Consultation Paper is extensive. It is specifically aimed at the problems caused by short-notice evictions on tenants whose tenancies are not binding on their landlord’s mortgage lender. In this respect the Government is not seeking to grant unauthorised tenants additional or enhanced rights compared to other tenants in the same situation. What the Government wishes to do is to place unauthorised tenants of a repossessed landlord on a more equal footing with those of other tenants, by providing them with an entitlement to a minimum of two months’ notice if they need to move.
Some assistance has already been provided. Since April 2009, the amendment to CPR 55.10(2) required lenders to send a notice to the property addressed to “the occupiers” within 5 days of receiving notification of the date of the hearing from the court. The latest amendments in the 50th Update to the Civil Procedure Rules (to take effect from 1st October 2009) require that the notice must be addressed to the tenant or occupier.
The Consultation Paper proposes five main options:
Option 1: To make no legislative changes.
Option 2: To give the court power to delay possession for unauthorised tenants.
Option 3: To enhance the process for notification of possession proceedings.
Option 4: To provide for a new notice of intention to enforce possession with a mechanism for unauthorised tenants to apply for a delay of enforcement.
Option 5: To provide for a new mechanism for a two-month stay in enforcement.
The Consultation period runs until 14th October 2009 and is open to the public.
Comment
The problems caused by ‘short notice evictions’ have really only come to light as a result of the boom and bust in the buy to let residential property market and the surge in lettings activity – both authorised and unauthorised. For further information generally on the problems, see the Shelter website. It is likely that the Council of Mortgager Lenders will publish its response in due course. Frankly, there is little scope to argue against substantive protection for tenants and lenders would do well to embrace this opportunity to regularise what is fast becoming a real problem area.