Government shuts repossession loophole

The Ministry of Justice has issued a consultation document that would halt the practice, following the case of Horsham Properties Limited v Clark and Beech.

Here a lender was able to repossess a home because the occupant had a buy-to-let mortgage on the property, which did not allow them to live in it. The lender sold the property with the borrower still in it, and the buyer then had to obtain a court order to take possession of the home.

Justice minister Bridget Prentice said: ‘Under the existing law lenders have the right to repossess and sell a property without seeking either the agreement of the owner, or of the courts.

‘While there is no evidence that owner-occupiers are being treated in this way, the government proposals published today would close this loophole and prevent any future instances of “rogue lenders” behaving this way.’

The government has also published figures showing its free last-minute advice and representation service helped 33,176 people in England between October 2008 and September 2009.

Seventy six per cent of people advised through the Housing Possession Court Duty Scheme were able to return home immediately following repossession hearings, 16 per cent lost their homes, and in 8 per cent of cases the outcome is unknown.

Housing minister John Healey said: ‘Thanks to this government action, repossessions are running at half the rate of the 1990s and over 330,000 families have benefited from free help and advice over the past year.’

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