Repossession by a landlord's lender

This content applies to England only.

Housing laws vary between England and Scotland. This page applies to England only. Get advice relating to Scotland

Most tenants are in a weak position if their landlord's lender wants to repossess the property. But you may have some protection from eviction if your tenancy is binding on the landlord's lender. If not, you will have to look at other options.

In most cases, the lender's right to repossess the property overrides the tenants' right to live there. If you think that repossession by your landlord's lender is a possibility you should get advice immediately. Use our directory to find an adviser in your area, call our helpline or get advice by email.

How can an adviser help?

A housing adviser may be able to help you work out:

• what stage of the repossession procedure has been reached
• whether there is any possibility of stopping or delaying the eviction
• whether your tenancy is binding on the landlord's lender (see below)
• whether you are entitled to help from the council if the worst happens and you lose your home
• what your alternative housing options are.

If you know that repossession proceedings have been started, do not delay getting advice. You may only get a few days notice before the bailiffs come to evict you, so you must act very quickly to have any chance of keeping your home. Use our directory to find an agency in your area.

Can people with mortgages legally grant a tenancy?

Yes. But only if only their mortgage deed says it is allowed and/or they have their lender's permission. Most mortgage agreements do not allow tenancies to be granted without permission, and many lenders will try to repossess the property if they find out that this has happened.

What about Buy-to-Let mortgages?

If your landlord bought the property through a Buy-to-Let mortgage, you should have been given written notice explaining this at the start of your tenancy. If this is the case, you probably have no right to stay in the property after it is repossessed by the lender.

What notice am I entitled to?

Lenders are often unaware that a property has been rented out to tenants, so it is common for legal proceedings to be started (eg for mortgage arrears) without the tenants even being aware that there is a problem.

A reasonable landlord should always warn her/his tenant if repossession is a possibility, but in many cases, tenants will not be aware of any problem until the court sends a notice to the property, informing them that the lender has been given a possession order and the bailiffs will be coming to repossess the property.

This notice (form N54) should be addressed to the defendant in the possession proceedings (ie the landlord) and 'any other occupiers.' It tells you when bailiffs will be coming. It may only give a few days notice of an eviction, so get advice immediately if you receive one.

What happens if the lender gets a possession order?

Most tenants have no right to remain in their home once the mortgage lender has been given a possession order by the courts. From this point onwards, anyone living in the property is an 'unlawful occupant' and can be evicted by the bailiffs. No separate court hearing needs to be held but you should receive written notice (see above).

There are exceptions, however. You may have the right to stay on as the tenant of the lender if your tenancy is binding on them. See below for more information.

Is my tenancy binding on the landlord's lender?

In very limited circumstances, your tenancy may be binding on the landlord's lender. This means the lender will become your landlord after the repossession and will need a separate court order to evict you. Most tenancies are not binding on the lender, but there are exceptions. You may have a binding tenancy if:

• you were already living in the property at the time the mortgage was granted (eg as a sitting tenant or when the landlord took out a second mortgage), or
• the lender specifically agreed to the tenancy, or
• the landlord's lender has recognised the tenancy in some way (eg by asking you to pay rent direct to them or by accepting rent from you). Most lenders will avoid doing this or will call the payment something other than 'rent'.

If you are unsure about when the landlord's mortgage started, ask your landlord, or get advice to find out whether the tenancy is binding. An adviser may be able to confirm this via the court, the lender, and/or the Land Registry.

How does a binding tenancy affect my rights?

If your tenancy is binding, the lender will become your new landlord. You would continue to have the same type of tenancy that you had before, so your rights would remain unchanged. In most cases, this means that you at least have the right to a written notice and court order before the lender can evict you. As your new landlord, the lender is required to follow the correct eviction procedures.

What should I do if I have a binding tenancy?

If you have a binding tenancy, you should:

• get advice immediately on how to present your argument
• try to provide written proof of the date the tenancy began, such as a written tenancy agreement
• write to the lender to confirm that the tenancy is binding as soon as you find out that repossession is a possibility. Send photocopies of any proof you have.

When deciding whether to take action, remember that the court may order you to pay legal costs, which can be expensive. It is probably worth trying to use the rights a binding tenancy gives you if:

• you have a regulated tenancy or an assured tenancy as these give you stronger housing rights that are worth protecting, or
• you need more time to find alternative accommodation.

But if your tenancy gives you little protection from eviction (eg if you are an assured shorthold tenancy) you will only be able to delay the eviction (rather than stop it) as the lender will not need to prove a legal reason in order to evict you. In this situation, taking action to stay on may not be worthwhile.

What if my tenancy is not binding?

Most tenancies are not binding on the lender. If you are in this situation and your home is being repossessed, you may be able to:

• persuade the lender to take over as landlord and/or to give you more time.
• ask the court to 'suspend the warrant for possession' to allow you time to find alternative accommodation. An adviser can help you do this.
• use publicity. Local and national media may be interested to hear about tenants who are the innocent victims of repossession. Publicity may encourage the lender to allow you to stay on.
• seek compensation from the landlord. The court can award damages for loss of the tenancy, but cannot reinstate you in the property. And bear in mind that if your landlord has lost the property due to mortgage arrears, it may be difficult to enforce any money judgment that the court makes.

Can the landlord evict me her/himself?

Probably, although in most cases s/he will have to give you proper notice and get a court order before s/he can do so. This would give you more time to find alternative accommodation. The exact rules on for how and when the landlord can evict you depend on the type of tenancy you have. Use our tenancy checker to find out more.