Mortgage repossessions

Just before the New Year, the Ministry of Justice announced a proposal to require mortgage lenders to obtain a court order or the consent of the borrower before repossessing and selling residential owner-occupied homes. The proposed changes aim to put current lending practice into law, and ensure that borrowers obtain normal protections offered by the court. The proposals relate to residential owner-occupied properties, and would not affect buy-to-let mortgages or other commercial loans, nor affect other remedies available to mortgage lenders where a borrower defaults on a mortgage. A consultation ends on 28 March. Click on: Mortgages: power of sale and residential property.

The proposal seeks to negate the effects of the case of Horsham Properties Group Ltd v Clark [2008] EWHC 2327 (Ch). This case had caused considerable concern, given its finding that a sale by a mortgagee without its first obtaining a court order for possession, deprived the borrower of the protections of the Administration of Justice Act 1970. Whilst most mortgagees would normally seek an order for possession in order to sell with vacant possession (and the CML states that its members agree to do so in owner-occupied cases), others, particularly those in the buy-to-let sector, may choose not to do so.