UK prime minister hits out at landmark property ruling by high court judge

The Prime Minister Gordon Brown today hit out at a high court ruling that a lender was legally correct to sell the property of a buy-to-let borrower who was in arrears without a repossession order.

Yesterday's landmark high court ruling means that property owners could see their homes sold from under them by mortgage lenders after just two missed repayments.

The ruling, based on a 1925 law, flies in the face of new guidance that is being drawn up by the Civil Justice Council on repossessions and at his monthly news conference Mr Brown condemned the decision.

'This is not an acceptable situation. We have said very clearly there were rules for banks to go through,' Mr Brown said.

He said the government was calling on lenders to offer borrowers the option of extending the length of their mortgages if they are in trouble and allow them to switch to interest-only mortgages.

'There are millions of homeowners. We are determined only a few are repossessed,' added Mr Brown who also called for new 'responsible lending' and further protection against repossession.

The court heard that lender, GMAC-RFC, appointed receivers and auctioned the property. The homeowners were then evicted for trespassing by the new property owners, Horsham Properties.

The High Court ruling by Mr Justice Briggs confirmed that the property owners could be evicted under legislation from 1925 which allows loan providers to sell the homes of people in arrears without a court order.

The Council of Mortgage Lenders said the case did not make sense. 'Our position is that repossession should remain the last resort. For a lender it makes no business sense to take possession. It makes no sense at all,' a CML spokesperson said.

The Ministry of Justice confirmed it is investigating the case and justice secretary Jack Straw is taking legal advice to see it further action is needed to protect homeowners.

'Given the current economic situation, the government is working hard to ensure that people losing their homes is a last resort,' a department spokesman said.