What happens if my landlord’s property is repossessed? Can the mortgage lender evict me?

If this happens, it is usually because the landlord has mortgage arrears or they have rented the property without the lender’s permission. What happens next depends on what type of tenancy agreement you have.

As a tenant, what are my rights?

If you have a binding tenancy, and that usually means you are renting a property under an Assured Shorthold Tenancy (AST), which is the most common type, you have the right to remain in the rental property until the end of the tenancy unless there is a clause in the agreement enabling a mortgagor to forfeit the lease. So most tenants cannot be evicted from their property part of the way through a tenancy and nothing will change during the course of that tenancy.

If there is provision under the agreement to allow the lender to end the tenancy in these circumstances, the lender has to serve notice in line with the specific terms of the agreement. Usually, the mortgage lender will get in touch with the letting agent and/or tenant and let both know what is happening.

If you receive a letter from your landlord’s lender informing you that your rental property is at risk of being repossessed, get in touch with your letting agent immediately and they will liaise between you, the landlord and the mortgage lender and provide all the assistance you need.

You are fully protected in law and are not under threat of eviction. If the court makes a repossession order you then become a tenant of the mortgage lender and the tenancy will run its full course.

What happens at the end of the tenancy?

At the end of the tenancy, the lender must serve a Section 21 Notice giving two months’ notice to end the tenancy. You must pay rent until the date specified in the Section 21 Notice. Sometimes the lender might let the tenant stay longer as they will continue to collect rent to cover interest payments. Eventually they will probably sell the property but may choose to retain this income stream as long as possible.

Periodic tenancies

If you have a Periodic Tenancy, your position is different. A Periodic Tenancy occurs if, at the end of an Assured Shorthold Tenancy, neither landlord nor tenant signs another agreement and a Periodic Tenancy is automatically established on a rolling basis on the same terms and conditions as the previous Assured Shorthold Tenancy. If this happens, the mortgage lender can serve a Section 21 Notice giving two months’ notice to end the tenancy.

What happens to my tenancy deposit?

As long as the tenancy deposit is held in a government approved scheme (ours are held in the Tenancy Deposit Scheme), it is protected just as it would be if the property were not being repossessed. It covers any damage or non-payment of rent and will be returned to you in the normal way at the end of the tenancy.

What happens if I don’t have a binding tenancy?

If you have rented your property through a professional letting agent who has drawn up a legally binding tenancy agreement, you will be protected in law. But if you don’t have a binding tenancy agreement, you need to seek advice as the court can make a possession order and appoint court bailiffs to evict you. If this applies to you, Shelter (www.shelter.org.uk) and Citizens Advice (www.citizensadvice.org.uk) are both excellent sources of information. But in brief your situation is as follows:

If you don’t have a binding tenancy such as an Assured Shorthold Tenancy, the mortgage lender can take the landlord to court to gain possession of the property and this usually allows them to evict anyone living in the property.

First, the lender must write to ‘the occupiers’ at the address when they have a date for the court hearing. They must write again if they apply for a bailiff’s warrant and an eviction can only take place 14 days or more after this notice.

Delaying an eviction

You can try to delay repossession of your home by up to two months. You can do this by going to the hearing and asking the judge to delay the possession order by up to two months. You will have to pay a fee to make this application to the court.

If you don’t do this there is one further opportunity to delay repossession.

The mortgage lender must apply for a warrant of possession which gives the court bailiff the authority to evict a tenant. Before this can take place, the mortgage lender has to send you a notice at the property telling you that it is applying for a warrant. This is called a notice of execution of the possession order. When you receive this you can ask the lender to delay repossession for up to two months. If the lender refuses you can apply to the court. You may have to pay a fee to do this. Repossession can only be delayed for a maximum of two months.

Leaving the property

The court will send a notice to your home with the date when bailiffs will come to take possession of the property. If you haven’t left the property by this date the lender may change the locks.

For more information on repossessions and evictions, go to https://www.gov.uk/repossession.

How tenants can protect themselves from the risk of repossession

If you rent your property through a professional letting agent (ideally a member of ARLA Propertymark), they will help you every step of the way if your landlord defaults on their mortgage. As long as you have a binding tenancy, you are fully protected in law. This highlights the problems caused by not having a binding tenancy (usually an AST) and why it is so important for tenants to rent a property through a professional letting agent to ensure all legalities are met, as this is the only way to protect tenants from this sort of problem.