Landlords financing their properties on buy-to-let mortgages are 3 times more likely to default on their mortgage payments than normal borrowers. This has led to a spate of repossessions.

Between January and March this year, 4,100 buy-to-let properties have been taken back by the lenders. 1,700 were repossessed and 2,400 were transferred to “receivers of rent” who then took over the running of the properties.

Few tenants would be aware that their landlords were in financial trouble, so often, the first sign of a problem is when the bailiff comes knocking and they discover that the property is about to be repossessed.

So now the Government is proposing to bring in laws to protect tenants. But an existing law helps them if they are part way through a tenancy agreement. It’s called the Law of property Act 1925. Under this legislation, the lender can appoint a receiver of rents to take the property from the borrower. These receivers are often insolvency practitioners or chartered surveyors and operate independently from the lender and the borrower. But it is up to the lender to decide whether to apply for repossession or appoint a receiver of rents.

If you are a tenant and are up to date with your rent, the law says that you have the right to remain in the property until the end of your tenancy agreement. If you are not up to date, then you have effectively broken the agreement and you can be evicted.

A problem sometimes arises when the lender is not aware that the borrower had rented their property out. In this situation, the tenancy agreement is not normally binding on the lender. The lender will consider the agreement as fraud on the borrower’s part and therefore the tenancy agreement becomes void. In those situations the lender can decide whether to opt for immediate repossession or go down the receiver of rents route. In today’s difficult property market some lenders prefer to keep the rental going and hold the property until the housing market improves.

If you are a tenant and know that your landlord is in financial trouble, you should consult your solicitor.