Repossession rights

I started renting a flat with a couple of friends three months ago. We signed a six-month contract and paid two months' rent and a deposit of £750. We recently received a letter from lawyers saying that a warrant for possession of the property has been issued by the mortgage provider and we have a month to leave.

What are my rights as a tenant in this dispute between the landlord and his lenders?

This can be a complicated situation, and your rights, including any right to remain in the property, will depend on the circumstances. Usually the lender's (the mortgage company's) right to repossess the property will override your right to remain in it. You should have received notice of the possession hearing at least 14 days prior to the hearing.

Most people who rent privately from a landlord who lives elsewhere are assured shorthold tenants, so the following advice is based on this. 

If either of the following applies to you it is unlikely that you will have any rights to stay in the property:

• The landlord had already taken out the mortgage when you moved in.  This is because most mortgages say the borrower can't grant a tenancy without the lender's permission. If this is the case, and the lender repossesses the property, they can evict you without a court order. The lender will be able to take action to have any occupier evicted as part of the action to repossess the property;
• The property was purchased with a mortgage expressly for the purpose of being commercially let (sometimes known as a 'buy to let' mortgage). If this was the case, the lender can apply to the court to have you evicted. This is provided that written notice to this effect was given to you by the landlord at the start of the tenancy - although be aware that the court can waive this requirement.

However, you may have the right to stay in the property if one of the following applies:

• You were already living in the property when the owner purchased it (you were a 'sitting tenant'), or when they took out a second mortgage;
• You moved in after your landlord took out the mortgage, but the lender agreed to the tenancy;
• The lender takes over the position of landlord. This might happen if the lender has, expressly or by implication, done something to recognise you as a tenant. For example, the lender asks you to pay rent direct to them, or the lender accepts the payment of any rent you offer. But generally lenders avoid this happening by refusing to accept payment of rent.

If any of these situations apply to you and the lender repossesses the property, the lender will take over as your landlord and your legal protection will remain the same. You will become liable to pay rent to the lender.

If you do not have the right to stay in the property, you could ask if the lender is prepared to let you stay in the property. The lender would then become the landlord. You could try and negotiate with the lender for time to find alternative accommodation.

However, as your landlord, the lender may be able to evict you if they follow the correct possession procedure for assured shorthold tenancies. They can only do this before your contract expires if they have a specific legal reason (or 'ground') for doing so. Once your contract has expired, they don't have to renew it and don't have to give a reason if they want to evict you. 

If you think you may have a right to stay in the property, you should try to provide written proof of the date the tenancy began, for example, a written tenancy agreement or rent book, or letter from the local authority housing benefit section.

If possession has been granted, a bailiff warrant is the next stage. The Bailiffs will come to your home and leave a form informing you of the date and time of the eviction. You could ask the lender to suspend the possession warrant. Your landlord may still be able to take action to prevent repossession.

You may find it useful to get further local advice about this. A local law centre or advice service should be able work out your status and discuss your options in more detail.

Updated: 15/04/2010

Question answered by Shelter