Home Repossession (Protection)

Part of Bills Presented – in the House of Commons at 3:33 pm on 3rd February 2009.

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Photo of Andrew Dismore Andrew Dismore Labour, Hendon 3:33 pm, 3rd February 2009

I beg to move,

That leave be given to bring in a Bill 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;
to make certain powers available to the court in actions by mortgagees for possession of a dwelling-house;
and for connected purposes.

This Bill is about a very important human right: the right not to be thrown out of one's home without a court order. It is a right that affects millions of people, and it is of even greater importance in times of economic downturn such as these. However, it is a right that we simply do not have in this country. A recent court judgment now allows unscrupulous lenders to sell people's homes over their heads, without having first to go to court, when even just one mortgage payment has been missed.

The number of home repossessions resulting from defaults on mortgage repayments has increased dramatically in recent months. According to the Council of Mortgage Lenders, 45,000 homes were expected to have been repossessed by the end of last year, and 75,000 this year. The number of people in mortgage arrears rose to 168,000. The Financial Services Authority and the Council of Mortgage Lenders report that more than 1 million households are likely to default on a mortgage payment in the next year.

The Government have responded to the rising tide of home repossessions with admirable speed and decisiveness. The Prime Minister told the House on 22 October that new guidance had been given to county court judges to ensure that repossession of people's and families' homes was undertaken only as a matter of last resort. About a month later, on 19 November, the new pre-action protocol on seeking possession based on mortgage arrears came into force. Its purpose is to ensure that lenders and borrowers act fairly and reasonably with each other to resolve any matter concerning mortgage arrears. The Government have also introduced support for mortgage interest through the income support system, which has been improved. There is also the mortgage rescue scheme for vulnerable people and the home owner's mortgage support scheme.

In the meantime, however, in a case involving Horsham Properties, the High Court ruled at the beginning of October last year that lenders—banks, building societies and investment companies—were entitled to sell properties, including people's family homes, without having first to go to court for an order, following just a single default on a mortgage payment. That objective has been achieved as a consequence of the mortgage small print—according to the judge, "conveyancing shorthand"—that is in practically every mortgage deed, in combination with section 101 of the Law of Property Act 1925.

The purchaser of the property who is the new owner—very likely another faceless, compassionless investment company—is then entitled to a summary possession order against the borrower, the householder. The householder is now considered by the law to be a trespasser in his or her own home, which they no longer own. There is no defence in law against that claim. The new pre-action protocol and all the other forms of support that I have mentioned are therefore easily circumvented by unscrupulous lenders who invoke their power to sell the property in this way, without first having to go to court.

Both the Financial Services Authority and the Council of Mortgage Lenders have reported that UK sub-prime lenders have been taking an increasingly aggressive approach to repossessions, and predict that this trend is only likely to increase as economic conditions worsen. Hundreds of thousands of people and their families are therefore at serious risk of being thrown out of their homes, without first having had any opportunity whatever to put their point of view to a judge or to try to persuade the court that it is neither fair nor reasonable to evict them.

My Bill will reverse the High Court's judgment. It requires that lenders—sub-prime or otherwise—first obtain the court's permission, before they can call in their security by selling a property that is somebody's home. It will ensure that the court that hears the lender's application will have the power to delay the sale of the property and to give the borrower more time to repay, if that is appropriate in all the circumstances. It does not guarantee that people can stay in their homes indefinitely if they cannot pay the mortgage, but it does ensure that people have an opportunity to persuade an independent court that it is far too early, or disproportionate, to throw them into the street—with bags, baggage, furniture and kids' toys—at the whim of a hard-bitten property company.

Most people might have thought they had protection against this sort of thing happening but, as a result of last October's court case, they simply do not. It is truly shocking that in Britain in 2009, such a basic legal protection for home owners is not already part of our law, especially when human rights law requires there to be such protection.

The European Court of Human Rights recently ruled in a case against the UK— McCann v. UK—that the right to respect for one's home, guaranteed by article 8 of the European convention, includes such protection. It said:

"The loss of one's home is a most extreme form of interference with the right to respect for the home. Any person at risk of an interference of this magnitude should in principle be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under Article 8 of the Convention, notwithstanding that, under domestic law, his right of occupation has come to an end... the applicant was dispossessed of his home without any possibility to have the proportionality of the measure determined by an independent tribunal. It follows that, because of the lack of adequate procedural safeguards, there has been a violation of Article 8 of the Convention in the instant case."

Article 11 of the international covenant on economic, social and cultural rights also protects the right to housing. The UN Committee on Economic, Social and Cultural Rights has interpreted this in its general comments to include a right to due process and appropriate procedural safeguards before being evicted from one's home.

In our recent report on "A Bill of Rights for the UK?", the Joint Committee on Human Rights, which I chair, recommended that one of the rights that should be protected in any UK Bill of Rights was the right to housing. We suggested in our "draft outline Bill of Rights", the inclusion of provisions to the effect that

"everyone is entitled to be secure in the occupancy of their home" and

"no one may be evicted from their home without an order of a court."

Those provisions were modelled on the right to housing in the international covenant on economic and social rights and on the equivalent provision in the South African Bill of Rights.

Of course, not everyone agrees with the Joint Committee that a Bill of Rights should include protection for such social and economic rights. However, if the United Kingdom had a Bill of Rights that included such provisions, our courts would not have been able to interpret the law in the way they did in this appalling case, thus allowing lenders to cash in on their security by selling people's homes without first having to obtain a court's agreement that such a drastic step was proportionate in the circumstances. Until we have such a Bill of Rights, there is absolutely nothing to stop our courts giving the highest priority to the rights of banks over the rights of ordinary people to a fair hearing before they lose their homes.

This example of home repossession provides a good practical example of the way in which a Bill of Rights protecting social and economic rights such as the right to housing—including the right to minimum procedural safeguards before eviction from one's home—could defend hundreds of thousands of ordinary people against more powerful interests at times of economic hardship. It shows that human rights are, and should be, universal. They are not a villains' charter; they are for the middle-class professional struggling with a mortgage just as much as for the council or private tenant with rent arrears when each falls on hard times. No one should lose his or her home without good reason, without proper and fair justification, and without an impartial court hearing.

This problem is immediate and it is urgent. The judge in the Horsham Properties case said that it was a matter for Parliament to resolve. In the absence of the Bill of Rights that I advocated, there is no alternative but to try to change the law through this Bill, which amends the Law of Property Act 1925.

Question put and agreed to.

That Mr. Andrew Dismore, Mr Virendra Sharma, Shona McIsaac, John Austin, Mike Gapes, Ms Karen Buck, Siobhain McDonagh, Judy Mallaber, Rob Marris, Mr. Chris Mullin and Dr. Evan Harris present the Bill.

Mr. Andrew Dismore accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 26 June, and to be printed (Bill 52).

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