I beg to move,

That leave be given to bring in a Bill to provide that the repossession of residential property may be sought only under certain conditions;
and for connected purposes.

Last year, 10,250 owners had their homes repossessed as a result of mortgage arrears. That figure, which amounts to more than 200 properties a week, was more than 60 per cent. up on the previous year, and that upward trend is forecast to continue. It is lower than in the peak years of the late 1980s and early 1990s, but it is worrying and is only the tip of the iceberg, as the number of owners actually served with a court order can be more than 10 times that number. In most cases, the matter is settled before court and some have the order suspended, but the process of court action or even the threat of court action is traumatic to most of the people involved. The Council of Mortgage Lenders complacently states that the numbers, although rising, are below record levels, but that ignores the devastating effects on the families concerned, particularly the children.

Before I detail those effects, I must make the point that the Bill is not a measure to protect those who can pay but, for their own reasons, fail to do so. It is designed to protect those who are hit by circumstances outwith their control that make it difficult for them to meet their mortgage payments.

Anyone can be hit by unemployment, ill health and temporary loss of income, but their situation, given understanding by the lender, can be recovered. It is fair to say that in the majority of cases, particularly with the more responsible lenders, good sense and flexibility mean that the problem is worked out to the satisfaction of both parties. However, it is recognised that many lenders do not show the necessary patience and good will, and court action for repossession is sought prematurely. It is also notable that where a borrower is dealing with a bank on their own, the voluntary mortgage code is not always adhered to. Amazingly, much better sense is shown when bodies such as citizens advice bureaux become involved.

I should also say a word about insurance, which at first glance can be suggested as an easy solution. A large proportion of the properties involved are right-to-buy properties at the cheaper end of the market. Here, every penny counts with the borrowers, and most find insurance too expensive. Moreover, as is sadly the case with so many insurance products, the exclusions in the policies often make them of little use.

All Members will have had constituents who have endured the process, and may not need reminding of the damage done to families. Nevertheless, I should like to place on the record some details of a Rowntree Trust report on the social consequences of mortgage repossession for parents and their children. It found that repossession hits six main areas of people's lives: it alters their social status and identity, adversely affects personal and family relationships, affects their health and well-being, damages their quality of life, destroys future aspirations, and causes real problems for their children. Taking only three of those areas, the study lists the ways in which, for example, family relationships were affected. It found marital breakdown, arguments, inability to invest trust in the partner perceived responsible, and parenting difficulties. It noted poor physical health, poor mental health, stress and depression. For children, it found problems with loss of friends, different schools, bad health and, understandably, emotional insecurity.

In the light of the continuing rise in the number of repossessions, the questionable and somewhat arbitrary behaviour of lenders and the huge personal cost to the borrowers, as well as the social costs to us all, the Bill seeks to strengthen and rationalise the regulation of mortgage repossessions. It would ensure that irresponsible lending had to be taken into account when repossession was sought. No one wants to inhibit the flexibility of banks, but if things go wrong, the lending history should be a factor in deciding whether repossession is warranted.

As has been found necessary in other areas of financial life, there should be one regulator. Some loans are currently regulated by the Financial Services Authority under its mortgages regime; others are regulated by the Office of Fair Trading under the new consumer credit legislation. In the eyes of professionals in the industry, that is leading to confusion and difficulty. The Bill would establish a single regulatory regime for secured loan products. There would be a requirement that repossession should not be sought when there is a given level of equity in the property. I recently had a case where one of the major high street banks was seeking repossession for debts totalling less than £5,000, yet there was £90,000 equity in the property. Clearly, there was no need for that bank to race to court under those circumstances.

Under the Bill, the length of time a borrower has been in the property would have to be considered by the court. Ironically, under current consumer credit legislation, a car that is bought by hire purchase cannot be repossessed once the borrower has made a certain number of payments, but that facility does not apply in the case of a home, which is more vital to every family.

The Bill would force courts to take into consideration the damaging effects on children of a forced repossession. It would also seek to regularise the approach of local councils, which often, regardless of a date being given for eviction, refuse to consider the family for alternative housing until the actual eviction has taken place, thus making hostel accommodation unavoidable.

As the National Association of Citizens Advice Bureaux pointed out, some lenders take court action for possession too quickly and with too little regard to good arrears practice or the costs and consequences of such actions for the borrower. The Bill would introduce a pre-court protocol for mortgage repossessions in keeping with the broad strategy of the Department for Constitutional Affairs for reducing unnecessary court action. It would also be modelled on the pre-court protocol for rent arrears possessions that the Department is currently developing.

The measures are all designed to strengthen the regulations so that innocent, hard-working people who have a temporary setback can be given every opportunity to keep the family home together and, when appropriate and by agreement, make good the default. The best building societies do that in the main, but sadly there are people in the industry who ignore the voluntary mortgage code and needlessly destroy people's lives.

Question put and agreed to.

Bill ordered to be brought in by Mr. George Mudie, Mr. Kevan Jones, Mr. Phil Willis, Mr. Andrew Love, Mr. Jim Cunningham, Bob Spink, Mr. Elfyn Llwyd, Helen Jones, Colin Burgon, Mr. Nicholas Brown, Mr. Ian Austin and Alan Keen.