Find out what happens if your landlord doesn't pay the mortgage and your rented home is repossessed.
Repossession if your landlord doesn't pay the mortgage
If your landlord hasn't paid the mortgage on a property they rent to you, their mortgage lender can repossess it. You could be evicted.
In some cases, the mortgage lender becomes your landlord. This happens if your tenancy is a binding tenancy.
In most cases, the mortgage lender won't become your landlord and you'll have to leave. This happens if you don't have a binding tenancy.
After the court grants a repossession order, the lender can apply to the court for bailiffs to evict you. The court could delay the eviction for up to two months if asked.
It's important for you to go to the repossession hearing. You can make sure the judge knows that you live in the property and applies the correct rules to you.
You might have a binding tenancy if:
- your landlord had a buy-to-let mortgage
- the lender gave permission for the landlord to grant the tenancy
- the landlord's lender has recognised the tenancy in some way – for example by asking you to pay rent direct to them or by accepting rent from you
- you were already a tenant in the property when the mortgage was granted to your landlord
- the property was sold to the current landlord after your tenancy started
Ask your landlord or the lender when the mortgage was granted.
You can also search the Land Registry for this information. There is a small fee.
Eviction if a mortgage lender becomes your landlord
After a court orders the repossession of a rented property, a mortgage lender becomes your landlord if your tenancy is binding on them.
The order for repossession doesn't affect your rights as a tenant if you have a binding tenancy. You can continue to live in the property.
If they want to evict you, the mortgage lender must follow the rules for the type of tenancy you have. They must make another application to the court to do this.
Find out about:
- eviction from an assured shorthold tenancy
- eviction from an assured tenancy
- eviction from a regulated tenancy
If a mortgage lender doesn't become your landlord
After a court makes a repossession order, your landlord's mortgage lender won't become your landlord if your tenancy isn't a binding tenancy.
The mortgage lender can apply to the court for any tenants to be evicted by bailiffs. The application can only be made after the court makes a repossession order.
Asking for a delay
You can apply to the court for the eviction by bailiffs to be postponed for up to two months if you are a private tenant with:
- an assured shorthold tenancy
- an assured tenancy
- a pre-1989 regulated tenancy
You won't be able to ask for a delay if you:
- live in accommodation provided by your employer
- are a lodger (or other type of excluded occupier)
- live in the same building as your landlord (that isn't a purpose-built block of flats)
- don't pay any rent
Negotiating with the lender
You could ask the lender to take over as landlord and give you more time to find another place to live.
If you have a fixed term tenancy, they may be willing to allow you to stay until the end of the fixed term. They are not legally required to do this.
How you'll know about a repossession hearing
To repossess the property the mortgage lender has to apply for a court hearing and then get a court order.
Before they do this, the lender should try to find out if anyone is living there.
They must send a notice to the property before the repossession hearing telling the occupiers the date of the hearing.
They have to do this within five days of being told the date of the hearing by the court. The letter must be addressed to 'the tenant or the occupier'.
Always open post addressed to 'the occupiers'. Don't assume that it's junk mail.
Find out more about what happens at a repossession hearing.
How you'll know the bailiffs are coming
Mortgage lender's notice
A mortgage lender must send a notice to the property. This notice says they are going to ask the court to order bailiffs to evict anyone still occupying the property.
This notice must be hand delivered or sent by first class post or recorded delivery.
A special form must be used: see a sample of the form.
The bailiffs can't evict you for at least 14 days after this notice has been given.
Court's notice of eviction by bailiffs
If the court orders an eviction by bailiffs, the court sends you a notice to let you know when the eviction will happen.
How to stop or delay eviction by bailiffs
If you have a binding tenancy, you can apply to the court for the eviction to be stopped.
If your tenancy isn't binding, you can still try to delay eviction.
Contact your landlord's mortgage lender. Ask them to delay repossession for up to two months to give you more time to find somewhere to live.
If the lender doesn't agree to allow you more time or you don't get a response, contact the court and ask it to delay the eviction for up to two months.
You can do this at any one of these points:
- at the repossession hearing
- after the court has made an order for possession
- after the court gives permission for bailiffs to evict
How to apply to the court to stop or delay eviction
To ask the court to stop or delay eviction, complete Court Service form N244.
Send this form to the court where the hearing will be or has been held. Their contact details should be on any notices you received.
Provide any relevant documents and information that can help the court understand your situation, for example:
- a copy of your tenancy agreement
- proof of rent payments (for example a rent book or bank statements)
In deciding if it will delay eviction, the court looks at:
- your personal circumstances
- whether you have broken any terms and conditions of your tenancy (for example you have rent arrears)
- if the lender will suffer hardship as a result of delaying the eviction
The court may decide to delay the eviction but impose conditions. For example, you may have to pay rent directly to the lender as a condition of delaying the repossession.
Paying rent to the lender in these circumstances doesn't create a tenancy that is binding on the mortgage lender.
If a lender won't confirm your tenancy is binding
You can contact your landlord's mortgage lender if you believe you have a binding tenancy but the lender hasn't made any contact with you to confirm this.
Send them a photocopy of your written tenancy agreement and any other relevant evidence.
Ask the mortgage lender:
- to confirm in writing that your tenancy is binding
- what they intend to do with the property
- how future rent payments should be paid
You could ask the court to adjourn the case to allow you to get legal advice if the lender refuses to confirm your status or says your tenancy is not binding.
The court decides if you have a binding tenancy. The lender must accept this decision.
Compensation from your landlord
You can seek compensation from the landlord. A court can award damages for the loss of the tenancy, storage fees and emergency accommodation costs.
You have to pay legal costs to take court action against your landlord. If your case is successful, your landlord will normally be ordered to pay these costs as well as compensation.
It may be difficult to enforce any order the court makes if the landlord doesn't have money left after repaying their mortgage.
When to get help and advice
Get advice as soon as you know that repossession proceedings have started.
A housing adviser may be able to help you.
Use Shelter's directory to find a housing adviser
Last updated 31 Dec 2016 | © Shelter