POWER OF MORTGAGEE TO SERVE BLIGHT NOTICE (Hansard, 23 October 1968)

§ Mr. Graham Page
I beg to move, as an Amendment to the proposed Amendment, in line 12, leave out from "unit" to "and" in line 13.

Mr. Deputy Speaker
I think that it would be convenient to the House if the other four Amendments standing in the name of the hon. Member and his right hon. and hon. Friends were considered together, together with Lords Amendment No. 52.

§ Mr. Graham Page
The new Clause is very welcome. It applies the blight provisions to the mortgagee. I should perhaps declare my interest at once, because in discussing this Clause I should like to give some facts from my own experience. As a director of a building society, and having been on what we call the arrears committee of that society, I know something about the difficulties of dealing with a defaulting borrower. This Clause would put the mortgagee in the shoes of the mortgagor so that he might use the blight provisions, serve a purchase notice, and oblige the acquiring authority to acquire at that time without waiting until some later date.
First, may I refer to subsections (6) and (7), and say that there is going to be some difficulty here which may make the 1450 whole Clause ineffective in too many cases. Subsections (6) and (7) refer to the case where there is an outstanding notice. I foresee that a mortgagor who knows that his property has become blighted, and is likely, perhaps, to have to pay off the mortgage debt and have his property taken away from him at the same time, may have started off and served a purchase notice and then disappeared.
This happens in many cases. While there is a notice outstanding served by the borrower, the mortgagee will be unable to take any steps at all. He will have to wait for a certain period set out in subsection (7), until that outstanding notice has in some way expired. I think there are likely to be great difficulties when that happens, and it is the sort of practical case which may happen all too often.
Now I turn to subsection (2)(a), the subsection in which the Amendment at line 12 occurs. This paragraph requires the mortgagor to wait before serving his purchase notice until he is in a position to give immediate vacant possession of the land. This will give rise to grave difficulty. In the case of a building society mortgage, it will probably be three months' arrears before the society instructs its solicitors to take any action 1451 against the borrower, so that there will be that lapse of time.
The borrower may have found that his property is blighted. He is determined then to escape his liabilities somehow. He stops paying the mortgage instalments. Perhaps when he has got as far as being in arrears with three months' instalments an originating summons is issued. If he is co-operative, service on him may take a week. If he is not very co-operative, one will have to obtain an order for substituted service, which may take a month to two months to obtain from the court.
Then one has to obtain an appointment before the Master, and one seldom gets an appointment in under two months after serving the originating summons. The Master, if he thinks it is an ordinary case, will make an order for possession in 28 days after service of the order on the borrower. If he feels compassionate, he may make it 56 days. Drawing up the order will probably take two weeks. Service of the order will take another week. Thus, even if a vacation period does not intervene, eight or nine months will elapse before the order for possession is obtained. That is followed by a writ of possession which it will take the sheriff at least a month to enforce. Between eight and twelve months will pass before the mortgagee is in the position which subsection (2)(a) requires him to be in, of giving immediate vacant possession of the land ". He should be allowed to start the purchase notice procedure before he reaches that position, and that is what the Amendment in line 12 proposes.
11.30 p.m.
The second Amendment—to leave out lines 31 to 39—in another effort to simplify the procedure. The paragraph it is sought to delete is a proviso that the Clause shall not enable a person, if his interest as mortgagee is in the whole of a property, to serve a purchase notice for part of the property, or if it is for only part of the property to serve a notice for the whole of the property. This will place the mortgagee of an agricultural unit in great difficulty. Perhaps only one agricultural cottage on farm land is affected by the blight and he will want to serve a notice for part of the property 1452 which is in mortgage to him. I see no reason why he should not do so. I do not see the point of the proviso to subsection (3).
The Amendment in line 40 is another effort to simplify the procedure. The purpose of the Clause is to put the mortgagee in the position of the borrower, who has a right to serve a purchase notice; it is merely to put him in the shoes of the borrower so that, if the borrower fails to take the proper action, the mortgagee can do so. Instead of complicating the position with the provisions of subsections (4) and (5), can we not say simply that all that the mortgagee has to show is that the interest which he claims he has power to sell is an interest which would have given the borrower the right to serve the purchase notice?
The Amendment in line 62 is a proviso that a person entitled to serve a notice under section 129"— that is, a purchase notice if his property is blighted— or under this section may require that he be joined as a claimant in a notice which is outstanding. Where there is an outstanding notice, the mortgagee may be in difficulty in having to wait for the notice to expire or be removed. The Amendment in line 93 is consequential on this Amendment.
We welcome the Clause. It will meet a number of difficult cases arising now. It will enable mortgagees, particularly building societies, to serve a purchase notice and thereby in many cases to preserve a property. I have experience of perhaps a score of properties which have become blighted, small dwellings where the owner-occupier has realised that a road is to be built through his back garden or on stilts in front of the windows of his house, and he has disappeared. The building society has lost touch with him and he has failed to pay his instalments. The house is empty. It does not take more than a week for that house to be ruined by hooligans. Windows and doors are smashed. If that house is left for eight or 12 months before the building society is able to say, "We can give immediate vacant possession because we have an order of the court putting us into possession", the property will be completely ruined before the purchase notice can be served.
1453 This would be a great pity, in many cases, particularly road widening and construction of trunk roads, where the Ministry of Transport is prepared to recognise the blight and purchase the property, because the road will not be built for some years, or to let the property to the local authority for housing purposes if the mortgagor can act quickly. The property can then come into the hands of the local authority quickly for housing purposes. This procedure would be beneficial to many more people than the mortgagor.
I hope that the Parliamentary Secretary will be able to accept at least some of the Amendments because they are put forward in a spirit of trying to improve the Clause and with some knowledge of the practical difficulties in carrying out the procedure.

§ Mr. MacColl
I find it difficult to argue with the hon. Member because he has great knowledge and I cannot share his interest because I have not done work for a building society. Nor, I am happy to say, have I yet been an escaping mortgagor. So my interest is detached.
In trying to carry out the wishes of the House, we have consulted the Building Societies Association, which is content with this Clause in its present form and we have cleared some of the very technical points which have been raised. I think that the hon. Member had the key to the matter when he said that the object was to put the mortgagee in the shoes of the mortgagor. That is correct, but the rights to serve blight notices are very limited under the principal Act. They are limited to owner-occupiers in residence. It is important that the powers given to the mortgagee should be no greater than those with the original mortgagor. That is why there is the provision that he must be able to sell with immediate vacant possession.
On the second Amendment, it is the whole mortgage interest that is concerned and that follows the provisions of Section 139 (2,c) of the 1962 Act. The period of six months' grace given to the mortgagee under subsection (4,b) is to meet the difficulties of the mortgagee who does not find out what is going on and has to lake time to get his action organised.
1454 It would not be desirable to have two outstanding blight notices competing. It is essential that one should be dealt with before the other one is served. While there is an outstanding blight notice the benefit of that can be enjoyed by the other party.
I apologise for the length of the new Clause, but a great deal of work has been put into getting it right. We have carefully consulted those who could advise us, and have come to the conclusion that this is the best way of making what we all agree is a very useful strengthening of the Bill.

	"D.—(1) The provisions of this section shall have effect for enabling mortgagees to take advantage of the provisions of sections 138 to 151 of the principal Act (notice requiring purchase by local planning authority on grounds of planning blight).
	(2) Where the whole or part of a hereditament or agricultural unit is comprised in land of any of the descriptions contained in paragraphs (b) to (f) of section 138(1) of the principal Act or paragraphs (a) to (d) of section 30(1) of this Act and a person claims that—
10	(a) he is entitled as mortgagee (by virtue of a power which has become exercisable) to sell an interest in the hereditament or unit, giving immediate vacant possession of the land; and
15	(b) since the relevant date (within the meaning of section 139 of the principal Act or, as the case may be, section 30(3) of this Act) he has made reasonable endeavours to sell that interest; and
20	(c) he has been unable to sell it except at a price substantially lower than that for which it might reasonably have been expected to sell if no part of the hereditament or unit were comprised in land of any of the said descriptions,
25	then, subject to the provisions of this section, he may serve on the appropriate authority a notice in the prescribed form requiring that authority to purchase that interest to the extent specified in, and otherwise in accordance with, sections 138 to 151 of the principal Act.
30	(3) Subsection (2) above shall apply in relation to an interest in part of a hereditament or agricultural unit as it applies in relation to an interest in the entirety of a hereditament or agricultural unit.
	Provided that this subsection shall not enable a person—
35	(a) if his interest as mortgagee is in the entirety of a hereditament or agricultural unit, to make any claim or serve any notice under this section in respect of any interest in part of the hereditament or unit; or
	(b) if his interest as mortgagee is only in part of a hereditament or agricultural unit, to make or serve any such notice or claim in respect of any interest in less than the entirety of that part.
40	(4) Notice under this section shall not be served unless one or other of the following conditions is satisfied with regard to the interest which the mortgagee claims he has the power to sell:—
45	(a) the interest could be the subject of a notice under section 139 of the principal Act served by the person entitled thereto on the date of service of the notice under this section; or
50	(b) the interest could have been the subject of such a notice served by that person on a date not more than six months before the date of service of the notice under this section.
55	(5) If any question arises which authority are the appropriate authority for the purposes of subsection (2) above, subsection (4)(b) above shall then apply with the substitution for the period of six months of a reference to that period extended by so long as it takes to obtain a determination of the question.
60	(6) No notice under this section shall be served in respect of a hereditament or agricultural unit, or any part of a hereditament or agricultural unit, at a time when a notice already served under section 139 of the principal Act is outstanding with respect to the hereditament, unit or part; and no notice shall be so served under section 139 of that Act at a time when a notice already served under this section is so outstanding.
65	(7) For the purposes of subsection (6) above, a notice served under this section or section 139 of the principal Act shall be treated as outstanding with respect to a hereditament or agricultural unit, or to part of a hereditament or agricultural unit, until—
	(a) it is withdrawn in relation to the hereditament, unit or part; or

70	(b) an objection to the notice having been made by a counternotice under section 140 of the principal Act, either—
	(i) the period of two months specified in section 141(1) of the principal Act elapses without the claimant having required the objection to be referred to the Lands Tribunal under that section; or
75	(ii) the objection, having been so referred to the Lands Tribunal, is upheld by the Tribunal with respect to the hereditament, unit or part.
80	(8) The grounds on which objection may be made in a counter-notice under section 140 of the principal Act to a notice under this section are those specified in paragraphs (a) to (c) of subsection (2) of that section and in a case to which section 31(1) below applies, the ground specified in that subsection and also the following grounds:—
85	(a) that, on the date of service of the notice under this section, the claimant had no interest as mortgagee in any part of the hereditament or agricultural unit to which the notice relates;
90	(b) that (for reasons specified in the counter-notice) the claimant had not on that date the power referred to in subsection (2)(a) above;
	(c) that the conditions specified in subsection (2)(b) and (c) above are not fulfilled;
95	(d) that (for reasons specified in the counter-notice) neither of the conditions specified in subsection (4) above was, on the date of service of the notice under this section, satisfied with regard to the interest referred to in that subsection."