Housing Law News 2009

The stories so far...

 

Mortgage Possession Claims

The Law Society on 15th January 2009 issued a Mortgage repossession practice note. It is aimed at all solicitors involved in residential possession claims. The practice note gives advice on the ramifications of the Pre-Action Protocol for Possession Claims based on Mortgage arrears in Respect of Residential Properties which came into force on 17 November 2008. The aim is to encourage early dispute resolution and to force lenders to use possession actions against homes of those facing financial difficulties only as a last resort. Every lender bringing such a claim must comply with the Protocol at the risk of failure of the claim and/or costs sanctions.

Figures released in February 2009 suggest that the Protocol is working. Mortgage repossession claims issued in the courts have dropped by 50 per cent. Repossession claims dropped by 32 per cent to 26,008 in the last quarter of 2008.

It should be noted that the Protocol does not affect the right of a Lender to enforce its security by other means. Lenders can use other contractual rights such as appointing a receiver or exercising their contractual power of sale. In these circumstance once a property is sold a borrower will lose their equity and if they remain in occupation will become a trespasser. See the Law Society

On 3rd February 2009 Parliament received a first reading of the Home Repossession (Protection) Bill (Bill No.52). The bill seeks to amend the Law of Property Act 1925 to require a mortgagee to obtain the court’s permission before exercising the power of sale, where the mortgaged land consists of or includes a dwelling-house. The Bill aims to make certain powers available to the court in actions by mortgagees for possession of a dwelling-house; and for connected purposes. The second reading is scheduled for 26th June 2009.

Mortgage Rescue Scheme

On 16th January 2009 a £200 million mortgage rescue scheme to help vulnerable families at risk of prepossession to stay in their homes was rolled out across England. Those vulnerable households with income of less than £60,000 a year would be entitled to be re-housed under homelessness legislation. The vulnerable are defined as the elderly, disabled or those with children.

Two options will be available to households to help them remain in their homes: Sale of a share in their home to a housing association to reduce mortgage outgoings; sale of the entirety of the home to a housing association whilst remaining as tenants paying a subsidised rent. Legislation has also been introduced to give power to a local authority landlord of long leases to buy a share of the lease in lieu of payment of service charges. This particular provision is not in force as yet.

Changes have also been made to welfare benefits. In early January 2009 the regulations governing Income Support for Mortgage Interest were amended to make it possible for homeowners to receive financial help with the interest payments on their mortgage after 13 weeks rather than 39 weeks.

Lastly the Homeowner Mortgage Support Scheme is being developed by the government jointly with Lenders to allow households who suffer an "income shock" to defer part of their payments for up to two years.

Are Registered Social Landlords Public Authorities?

Later in 2009 the Court of Appeal will give judgment in the appeal of the RSL against a finding by the High Court judge that the RSL was a public authority within the meaning of the Human Rights Act 1998 in the management and allocation of its housing stock. See R(Weaver) v London & Quadrant Housing Trust [2008] EWHC 1377 (Admin).

New Legislation

Housing and Regeneration Act 2008

The Housing and Regeneration Act (“H&RA”) 2008 received royal assent on 22nd July 2008.

Part 1 and Part 2 of the Act respectively creates two new bodies:

The Homes and Communities Agency (HCA): The Office for Tenants and Social Landlords to be known as the Tenant Services Authority (TSA)

The HCA is intended to replace the Urban Regeneration Agency and Commission for New Towns and will take the investment in housing function of the now abolished Housing Corporation.

The TSA will regulate registered providers of social housing in England.

Other significant amendments in the H&RA 2008

The death of the oxymoron “tolerated trespasser” is now official.

The tolerated trespasser is the term given to those former tenants who remain in premises without any contractual or statutory rights. First coined by the House of Lords a little over a decade ago it has caused numerous jurisprudential problems. The combined effect of section 299 and Schedule 11 H&RA 2008 is that as from date as yet unknown (but expected to be April 2009) a tenancy which is secure, demoted or assured or an assured shorthold will only come to an end on the execution of the possession order. By this device there will in future be no tolerated trespassers. See also Knowsley Housing Trust v White; Honeyghan-Green v Islington LBC: Porter v Shepherds Bush Housing Association [2008] UKHL 70 a judgment given on 10th December 2008 where the House of Lords decided that an assured tenancy subject to a suspended possession order did not come to an end until possession was given up. A new “replacement tenancy” will arise on commencement of the Act subject to certain conditions. The court’s discretion to discharge a possession order under section 9(4) Housing Act 1988 and section 85(4) Housing Act 1985 is widened to allow discharge where there has been less than perfect compliance with conditions by the tenant.

Family Intervention Tenancies (FITS)

From 1st January 2009 local housing authorities and registered social landlords are able to enter into FITS. The tenancies are offered for the purposes of providing behavioural support services to tenants who face or are already the subject of possession orders for anti social behaviour. Eviction of such tenants are subject to similar reviews applied to introductory tenants.

H&RA 2008 Changes to the Homelessness provisions

Schedule 15 H&RA 2008 makes several amendments to the Homelessness Provisions Part VII Housing Act 1996. The Schedule is not yet in force.

Priority Need

One of the most notable is that the incompatibility noted in R(Morris) v Westminster City Council [2005] EWCA Civ 1184 has been remedied. The court had held that section 185(4) Housing Act 1996 which provided that persons from abroad who not eligible for housing are to be disregarded when determining whether or not an applicant has priority need was incompatible with Article 14. A new category of homeless applicant –“a restricted person”- is created to whom a limited duty is owed. The schedule is not yet in force.

Local Connection

Section 315 H&RA 2008 amends section 199 of the Housing Act 1996. A person in the armed forces will now be able to establish a local connection with a district through residence or employment there in the same way as a civilian. The changes came into force on 1 December 2008.

Disclaimer

Housing Law News is intended to be a note of current news in this area. The above does not constitute legal advice and should not be relied on as such. The author welcomes any queries or comments on this Note.