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

Your landlord's lender may try to repossess the property you are renting if your landlord does not keep up with their mortgage payments. If this happens, you may have some protection from eviction if your tenancy is binding on the landlord's lender. If not, your options will be more limited.

Following a joint report by Shelter, Citizens Advice, Crisis and the Chartered Institute of Housing, the Government is currently considering changes to the law, which would mean that many more private tenants would be entitled to two months' notice. However, if you think that repossession by your landlord's lender is a possibility you should get advice immediately as in many cases tenants can still be evicted with very little notice. 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 the following questions:

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

If you are a tenant and you know that repossession proceedings have been started, do not delay getting advice. You might 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.

Your local Shelter advice centre may be able to help, or you can call our national helpline on 0808 800 4444. Alternatively, a local Citizens Advice Bureau or other advice centre may be able to assist you. Use our directory to find services in your area.

Can people with mortgages legally grant a tenancy?

Yes, but only if 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 will normally be in a stronger position than if your landlord's lender did not know that the property was rented out. This is because your tenancy has effectively been formally recognised by the landlord's lender, which means that it is binding on them (see below).

If the lender gets a court order to repossess the property, they would normally have to give you proper notice if they want you to leave. The amount of notice you are entitled to will depend on the type of tenancy you have. 

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.

Since April 2009, lenders are required to send a letter to the property addressed to 'the ocupiers', informing everyone who is living at the property of the date of court hearing. They have to do this within five days of the hearing date being confirmed by the court. You should therefore always open post addressed to 'the occupiers' - do not assume that it is junk mail!

After this, the only notice that you will be given is if the court agrees to give the lender possession. If this happens, the court will send a notice to the landlord and 'any other occupiers', informing them of the date that the bailiffs will be coming to repossess the property. This notice (form N54) 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 still 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 some 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:

• Your landlord had a buy-to-let mortgage (see above).
• The lender gave permission for the landlord to grant the tenancy.
• 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). 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 by checking the Land Registry.
• 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'.

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 tenancy which is binding on the landlord, you should:

• get advice immediately on how to present your argument
• try to provide written proof of when the tenancy began, such as a written tenancy agreement
• write to the lender to confirm that your tenancy is binding as soon as you find out that repossession is a possibility. If possible, enclose a photocopy of the written tenancy agreement or any other proof that you have.

When deciding whether to take action, remember that the court may order you to pay legal costs, which can be expensive. It may not be worth trying to go to court unless:

• 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.

If your tenancy gives you little protection from eviction (eg if you have an assured shorthold tenancy and the fixed-term of your tenancy has ended) 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. The exact rules on for how and when the lender can evict you depend on the type of tenancy you have. Use our eviction checker to find out more.

What if my tenancy is not binding?

If the home you are renting is being repossessed, you should take action as soon as you are aware of the repossession, but most tenancies will not be binding on the lender. You may be able to:

• persuade the lender to take over as landlord and/or to give you more time to find another place to live
• ask the court to suspend or set aside the warrant for possession to allow you time to find alternative accommodation – an adviser can help if you need to 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 and/or for storage and emergency accommodation costs, however, the court cannot reinstate you in the property. You should also bear in mind that if your landlord has lost the property due to mortgage arrears, they may not have much money left after the mortgage has been repaid.

Once the lender gets a possession order you will have no right to stay in the property and the lender may change the locks. You should still be allowed access by the bailiffs so that you can collect your belongings.

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 how and when the landlord can evict you depend on the type of tenancy you have. Use our eviction checker to find out more.