Kensington Mortgage Company Limited v Mark Price & Ors

By this claim the claimant, a mortgage lender specialising inter alia in the provision of buy-to-let mortgage funding, seeks determination of the meaning and effect of certain provisions of the Housing (Wales) Act 2014 (“the 2014 Act”) and the Renting Homes (Wales) Act 2016 (“the 2016 Act”).

The first and second defendants (“the owners”) are the registered proprietors of the leasehold land and premises at the ground floor, 1 Cwrt Naomi, Pentre Doc y Gogledd, Llanelli (“the Property”), under a lease for a term of 125 years from 1 January 2005 from Carmarthenshire County Council. They purchased the Property with the assistance of a loan from the claimant, which was secured by a registered charge dated 29 June 2007 (“the Mortgage”).

In 2022 the owners fell into arrears on their mortgage payments. The claimant brought possession proceedings against them in the County Court at Llanelli. On 5 September 2022 the district judge ordered that the owners give the claimant possession of the Property on or before 3 October 2022 and entered judgment against them for the balance due under the mortgage. A warrant of eviction was issued, with eviction scheduled for 24 January 2023.

However, in December 2022 Shelter Cymru (“Shelter”) contacted the claimant’s solicitors on behalf of the third and fourth defendants (“the occupiers”), who claimed to be living at the Property. After an application was made to suspend the warrant, the claimant withdrew the warrant on 20 January 2023.

It now appears that the owners had sub-let the Property to the occupiers on what was an assured shorthold tenancy and is now, by virtue of the 2016 Act, a standard occupation contract. (Apart from the fundamental terms implied by the 2016 Act, the claimant does not know the terms of the occupation contract, of which no copy has been provided.) This was not appreciated by the claimant when it brought the possession proceedings against the owners. In fact, the mortgage conditions precluded sub-letting; however, the claimant accepts that it advanced the loan and took the mortgage on the shared understanding that it was a buy-to-let transaction, and accordingly it also accepts that the occupation contract is binding upon it.

On 6 June 2023 the claimant’s solicitors served on the occupiers a notice under section 8 of the Housing Act 1988 (“the 1988 Act”) seeking possession pursuant to Ground 2 in Schedule 2 to the 1988 Act (possession to enable mortgagee to exercise power of sale with vacant possession). When the occupiers did not vacate the Property by the expiry of the notice, the claimant commenced possession proceedings. The occupiers defended the proceedings on the grounds that the section 8 notice was invalid as a result of the coming into force of the 2016 Act. The claimant discontinued the proceedings.

The facts put in evidence by the claimant and accepted by Shelter in these proceedings are that, except as already set out, the claimant has taken no action in respect of the Property and, indeed, has not communicated further with the occupiers. In particular, it has not received or asked for rent from the occupiers and has not carried out or been asked to carry out repairs or any other functions of a landlord. The first defendant told me that the occupiers had stopped paying him rent before the claimant commenced the possession proceedings.

The claimant is neither registered nor licensed under Part 1 of the 2014 Act and has not appointed any licensed agent. (The relevant statutory provisions are set out below.) So far as the court is aware on the strength of the parties’ enquiries, no local authority, major bank or mortgage company and no registered social landlord is registered as a landlord on the public register maintained pursuant to the 2014 Act.

The present claim was commenced by the issue of a Part 8 claim form on 10 November 2025. The relief sought on the face of the claim form is a declaration as to the proper meaning and effect of section 44 of the 2014 Act. The issues have broadened out to include the nature of the rights of the claimant under the 2016 Act. In general terms, the claimant seeks to establish that it is not a landlord for the purposes of the 2014 Act (and so is not subject to the requirements for registration and licensing under that Act) but that it is a landlord for the purposes of the 2016 Act (and so has the ability to seek possession in accordance with the terms of that Act without the need to be registered or licensed under the 2014 Act).

The defendants have taken no part in the proceedings, although the first defendant did attend the hearing of the claim and made a brief statement to explain his position before withdrawing.

Shelter was given permission to intervene in the proceedings and to make submissions. The Welsh Ministers declined an invitation to intervene.

I am grateful for the written and oral submissions of Mr Owain Rhys James on behalf of the claimant and of Miss Lucy King, Mr Dylan Jenkins and Mr Zack Hayward on behalf of Shelter. Particular thanks are due to Miss King, Mr Jenkins and Mr Hayward, who appeared pro bono.

The remainder of this judgment will be structured as follows. First, I shall set out what are, for present purposes, the most important provisions of the 2014 Act and the 2016 Act. Next, in the light of those provisions, I shall explain the issues that arise for determination. Finally, I shall discuss those issues.

It should be noted that both the 2014 Act and the 2016 Act are bilingual acts of the Senedd Cymru, enacted in both English and Welsh. Both languages have equal standing. It has not been argued that there is any particular issue in this case that requires consideration of both versions. All references below will be to the English text.

The 2014 Act received Royal Assent on 17 September 2014. It has been amended in numerous places in the light of the 2016 Act; here I set out the text as it currently stands.

Part 1 of the 2014 Act (sections 1 to 49) is headed “Regulation of Private Rented Housing”. Section 1 provides an overview of Part 1:

“(1)

This Part regulates—

(a)

the letting of dwellings under certain kinds of tenancy (which are defined as ‘domestic tenancies’ in section 2), and

(b)

the management of dwellings subject to such tenancies,

by means of a system of registration and licensing.

(2)

It requires landlords to be—

(a)

registered for each dwelling subject to, or marketed or offered for let under, a domestic tenancy in respect of which they are the landlord (section 4), subject to exceptions (section 5);

(b)

licensed to carry out certain kinds of lettings activities for dwellings marketed or offered for let under domestic tenancies (section 6), subject to exceptions (section 8);

(c)

licensed to carry out certain kinds of property management activities for dwellings subject to a domestic tenancy (section 7), subject to exceptions (section 8).

(3)

It requires persons acting on behalf of a landlord to be licensed to carry out—

(a)

lettings work in respect of a dwelling marketed or offered for let under a domestic tenancy (section 9);

(b)

property management work in respect of a dwelling subject to a domestic tenancy (section 11).

(4)

‘Lettings work’ and ‘property management work’ are defined for the purposes of the Part in sections 10 and 12; the definitions exclude certain persons and activities from the licensing requirements imposed on persons acting on behalf of landlords.

…

(8)

The requirements imposed by this Part are enforced by—

(a)

offences for contravention of registration and licensing requirements (see sections referred to in subsections (2) and (3) and sections 16(3), 23(3), 38(1) and (4) and 39(1) and (2));

(b)

fixed penalty notices (section 29);

(c)

rent stopping orders (sections 30 and 31);

(d)

rent repayment orders (sections 32 and 33).

…

(11)

Sections 43 to 48 make supplementary provision.

(12)

Section 49 makes further provision about interpretation and indexes the defined terms used in this Part.”

Section 2 defines certain “key terms”, including the following:

“(1)

In this Part—

‘domestic tenancy’ (‘tenantiaeth ddomestig’) means—

(a)

a tenancy which is an occupation contract, except where the occupation contract—

(i)

is a supported standard contact, or

(ii)

is also a long lease for the purposes of Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (‘the 1993 Act’) or, in the case of a shared ownership lease (within the meaning given by section 7(7) of the 1993 Act), would be such a lease if the tenant’s share (within the meaning given by that section) were 100 per cent;

(b)

a regulated tenancy for the purposes of the Rent Act 1977, or

(c)

a tenancy under which a dwelling is let as a separate dwelling and which is of a description specified for the purposes of this Part in an order made by the Welsh Ministers;’

…

‘landlord’ (‘landlord’) means—

(a)

in relation to a dwelling subject to a domestic tenancy, the immediate landlord or, in relation to a statutory tenant, the person who, apart from the statutory tenancy, would be entitled to possession of the dwelling subject to the tenancy, and

(b)

in relation to a dwelling that is not subject to a domestic tenancy, the person who would be the immediate landlord if the dwelling were let under a domestic tenancy;

…

(2)

In this section, ‘statutory tenant’ and ‘statutory tenancy’ mean a statutory tenant or statutory tenancy within the meaning of the Rent Act 1977.”

Section 4 imposes the obligation, in the context of private rented housing, for landlords to be registered:

“(1)

The landlord of a dwelling subject to, or marketed or offered for let under, a domestic tenancy must be registered under this Part in respect of the dwelling (see sections 14 to 17), unless an exception in section 5 applies.

(2)

A landlord who contravenes subsection (1) commits an offence and is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(3)

In proceedings against a landlord for an offence under subsection (2) it is a defence that the landlord has a reasonable excuse for not being registered.”

Section 5 provides exceptions to the requirement for registration:

“(1)

The requirement in section 4(1) does not apply—

(a)

if the landlord has applied to the licensing authority to be registered in relation to that dwelling and the application has not been determined;

(b)

for a period of 28 days beginning with the date the landlord’s interest in the dwelling is assigned to the landlord;

(c)

if the landlord takes steps to recover possession of the dwelling within a period of 28 days beginning with the date the landlord’s interest in the dwelling is assigned to the landlord, for so long as the landlord continues to diligently pursue the recovery of possession;

(d)

to a landlord falling within the definition of community landlord (whether or not the landlord is the landlord under an occupation contract);

(e)

to a landlord who is a fully mutual housing association;

(f)

to a person of a description specified for the purposes of this section in an order made by the Welsh Ministers”

Section 6 imposes the obligation, in the context of private rented housing, for landlords to be licensed to carry out “letting activities”:

“(1)

The landlord of a dwelling marketed or offered for let under a domestic tenancy must not do any of the things described in subsection (2) in respect of the dwelling unless—

(a)

the landlord is licensed to do so under this Part for the area in which the dwelling is located,

(b)

the thing done is arranging for an authorised agent to do something on the landlord's behalf, or

(c)

an exception in section 8 applies.

(2)

The things are—

(a)

arranging or conducting viewings with prospective tenants;

(b)

gathering evidence for the purpose of establishing the suitability of prospective tenants (for example, by confirming character references, undertaking credit checks or interviewing a prospective tenant);

(c)

preparing, or arranging the preparation, of a tenancy agreement;

(d)

preparing, or arranging the preparation, of an inventory for the dwelling or schedule of condition for the dwelling.

(3)

The Welsh Ministers may by order—

(a)

amend or omit the descriptions of things in subsection (2) (including things added under paragraph (b));

(b)

add further descriptions of things to subsection (2).

(4)

A landlord who contravenes subsection (1) commits an offence and is liable on summary conviction to a fine.

(5)

In proceedings against a landlord for an offence under subsection (4) it is a defence that the landlord has a reasonable excuse for not being licensed.

(6)

In subsection (1) ‘authorised agent’ means—

(a)

a person licensed to carry out lettings work and property management work under this Part for the area in which the dwelling is located,

(b)

a local housing authority (whether or not in exercise of its functions as a local housing authority), or

(c)

in relation to preparing, or arranging the preparation of a tenancy agreement only, a qualified solicitor (within the meaning of Part 1 of the Solicitors Act 1974), a person acting on behalf of such a solicitor or any person of a description specified in an order made by the Welsh Ministers.”

Section 7 imposes on landlords a similar licensing requirement in respect of “property management activities”:

“(1)

The landlord of a dwelling subject to a domestic tenancy must not do any of the things described in subsection (2) in respect of the dwelling unless—

(a)

the landlord is licensed to do so under this Part for the area in which the dwelling is located,

(b)

the thing done is arranging for an authorised agent to do something on the landlord's behalf, or

(c)

an exception in section 8 applies.

(2)

The things are—

(a)

collecting rent;

(b)

being the principal point of contact for the tenant in relation to matters arising under the tenancy;

(c)

making arrangements with a person to carry out repairs or maintenance;

(d)

making arrangements with a tenant or occupier of the dwelling to secure access to the dwelling for any purpose;

(e)

checking the contents or condition of the dwelling, or arranging for them to be checked;

(f)

serving notice to terminate a tenancy.

(3)

The landlord of a dwelling that was subject to a domestic tenancy, but is no longer subject to that domestic tenancy, must not check the contents or condition of the dwelling, or arrange for them to be checked, for any purpose connected with that tenancy unless—

(a)

the landlord is licensed to do so under this Part for the area in which the dwelling is located,

(b)

the thing done is arranging for an authorised agent to do it on the landlord’s behalf, or

(c)

an exception in section 8 applies.

(4)

The Welsh Ministers may by order—

(a)

amend or omit the descriptions of things in subsection (2) or (3) (including things added under paragraph (b)) that a landlord must not do unless any of paragraphs (a) to (c) of subsection (1) or (3) applies (as the case may be);

(b)

add further descriptions of things for the purposes of this section (including by way of amendment to this Part).

(5)

A landlord who contravenes subsection (1) or (3) commits an offence and is liable on summary conviction to a fine.

(6)

In proceedings against a landlord for an offence under subsection (5) it is a defence that the landlord has a reasonable excuse for not being licensed.

(7)

In subsection (1) ‘authorised agent’ means—

(a)

a person licensed to carry out lettings work and property management work under this Part for the area in which the dwelling is located,

(b)

a local housing authority (whether or not in exercise of its functions as a local housing authority), or

(c)

in relation to serving notice to terminate a tenancy only, a qualified solicitor (within the meaning of Part 1 of the Solicitors Act 1974), a person acting on behalf of such a solicitor or any person of a description specified in an order made by the Welsh Ministers.”

Section 8 provides certain exceptions to the licensing requirements, which correspond to the exceptions in section 5 to the registration requirements:

“(1)

The requirements in sections 6(1), 7(1) and 7(3) do not apply—

(a)

if the landlord has applied to the licensing authority to be licensed, for the period from the date of the application until it is determined by the authority or (if the authority refuses the application) until all means of appealing against a decision to refuse an application have been exhausted and the decision is upheld;

(b)

for a period of 28 days beginning with the date the landlord's interest in the dwelling is assigned to the landlord;

(c)

if the landlord takes steps to recover possession of the dwelling within a period of 28 days beginning with the date the landlord's interest in the dwelling is assigned to the landlord, for so long as the landlord continues to diligently pursue the recovery of possession;

(d)

to a landlord falling within the definition of community landlord (whether or not the landlord is the landlord under an occupation contract);

(e)

to a landlord who is a fully mutual housing association;

(f)

in cases specified for the purposes of this section in an order made by the Welsh Ministers.”

Section 9 imposes a requirement for agents to be licensed to carry out lettings work, and section 10 defines “lettings work”. Section 11 imposes a requirement for agents to be licensed to carry out property management work, and section 12 defines “property management work”. Section 13 makes it an offence for a landlord to appoint or continue to allow an unlicensed agent to carry out lettings work or property management work.

The group of provisions in sections 42A to 48 is headed “Supplementary”. Two sections in particular may be noted. Section 43 deals with the effect on tenancy agreements of activity in contravention of Part 1:

“(1)

No rule of law relating to the validity or enforceability of contracts in circumstances involving illegality is to affect the validity or enforceability of any provision of a domestic tenancy of a dwelling in respect of which a contravention of this Part has occurred.

(2)

But periodical payments—

(a)

payable in connection with such a tenancy may be stopped in accordance with section 30 (rent stopping orders), and

(b)

paid in connection with such a tenancy may be recovered in accordance with sections 32 and 33 (rent repayment orders).”

Section 44, which is much amended in the light of the 2016 Act, is the provision in respect of the interpretation of which the claimant seeks a declaration. It provides:

“(1)

A notice within subsection (1A) may not be given in relation to a dwelling subject to a domestic tenancy which is a standard occupation contract if—

(a)

the landlord is not registered in respect of the dwelling, or

(b)

the landlord is not licensed under this Part for the area in which the dwelling is located and the landlord has not appointed a person who is licensed under this Part to carry out all property management work in respect of the dwelling on the landlord's behalf.

(1A)

A notice is within this subsection, if it is a notice—

(a)

given under section 173(1) of the Renting Homes (Wales) Act 2016 (landlord’s notice);

(b)

given under section 186(1) of that Act (landlord’s notice in connection with end of term);

(c)

as described in section 194(1) of that Act (landlord’s break clause);

(d)

given under paragraph 25B of Schedule 12 to that Act (landlord’s notice to terminate a converted fixed term standard contract).

(2)

Subsection (1) does not apply for the period of 28 days beginning with the day on which the landlord's interest in the dwelling is assigned to the landlord.”

Finally, section 49 is an interpretation provision and provides in relevant part as follows:

“(1)

In this Part—

‘community landlord’ (‘landlord cymunedol’) has the meaning given by section 9 of the Renting Homes (Wales) Act 2016;

‘domestic tenancy’ (‘tenantiaeth ddomestig’) has the meaning given by section 2;

…

‘fully mutual housing association’ (‘cymdeithas dai cwbl gydfuddiannol’) has the meaning given by section 1(2) of the Housing Association Act 1985;

“landlord” (“landlord”) has the meaning given by section 2;

…

‘occupation contract’ (‘contract meddiannaeth’) has the meaning given by section 7 of the Renting Homes (Wales) Act 2016;

‘periodical payments’ (‘taliadau cyfnodol’) means payments by way of rent or service charge;

…

‘registered social landlord’ (‘landlord cymdeithasol cofrestredig’) means a social landlord registered under Part 1 of the Housing Act 1996;

…

‘standard occupation contract’ (‘contract meddiannaeth safonol’) has the meaning given by section 8 of the Renting Homes (Wales) Act 2016;

(2)

In this Part, a reference to assignment of an interest to a landlord—

(a)

includes any conveyance other than a mortgage or charge, and

(b)

if trustees constitute the landlord, does not include a change in the persons who are for the time being the trustees of the trust.

(3)

In this Part—

(a)

any reference to an application for a licence includes a reference to an application for renewal of a licence, and

(b)

any reference to the grant of a licence by a licensing authority includes a reference to renewal of a licence;

and related expressions are to be construed accordingly.”

The 2016 Act received the Royal Assent on 18 January 2016 but came into force only on 1 December 2022. In Coastal Housing Group Limited v Mitchell [2014] EWHC 2831 (Ch), [2025] 1 WLR 1517, the Divisional Court said at [1] that the Act had fairly been described in argument as “the most significant change to housing law in England and Wales since rent controls were introduced, over a hundred years ago, by the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915.

Part 1 contains an overview of the entire Act. Section 1 introduces “occupation contracts”, for which provision is made in Part 2:

“(1)

This Act (in Part 2) provides that—

(a)

most individuals who rent their homes under a tenancy or licence, and their landlords, make a contract with each other known as an occupation contract (and in this Act such individuals are referred to as ‘contract-holders’; see section 7);

(b)

there are two kinds of occupation contract, namely—

(i)

secure contracts, and

(ii)

standard contracts;

(c)

there are two kinds of standard contract, namely—

(i)

fixed term standard contracts, and

(ii)

periodic standard contracts,

and the two kinds of standard contract differ in relation to their variation, transfer and termination.

(2)

Each kind of occupation contract (and each kind of standard contract) gives different rights to, and imposes different obligations on, the contract-holder and landlord; a secure contract gives greater security of occupation to the contract-holder than a standard contract.”

Section 2 deals with landlords:

“(1)

This Act (in Part 2) provides—

(a)

for two kinds of landlord—

(i)

community landlords (which are local authorities, registered social landlords and other kinds of authority), and

(ii)

private landlords (which are any landlords who are not community landlords);

(b)

that both kinds of landlord may make, or adopt, specific kinds of occupation contract (though this is subject to various exceptions).

(2)

In general—

(a)

occupation contracts made with or adopted by community landlords are secure contracts, and

(b)

contracts made with or adopted by private landlords are standard contracts, but this is subject to various exceptions.”

Sections 9 and 10 define “community landlords” and “private landlords” consistently with section 2.

Section 244 contains an interpretation provision and reads in relevant part:

“(1)

This section applies for the purposes of interpreting this Act.

(2)

The landlord, in relation to an occupation contract, is the person that is (or purports to be) entitled to confer on an individual a right to occupy the dwelling as a home.”

The present case is concerned with private landlords, not community landlords. Although the occupiers’ tenancy agreement has not been seen, Mr James for the claimant accepts for the purposes of these proceedings that it is almost certainly a periodic standard contract.

Chapter 5 of Part 9 makes provision for termination of periodic standard contracts. Sections 168 to 172 deal with notice by the contract-holder. Section 173 provides for a landlord’s notice:

“(1)

The landlord under a periodic standard contract may end the contract by giving the contract-holder notice that he or she must give up possession of the dwelling on a date specified in the notice.

(2)

This section is a fundamental provision which is incorporated as a term of all periodic standard contracts.”

The relief sought on the face of the claim form is simply a declaration as to the proper meaning and effect of section 44 of the 2014 Act. By the accompanying Brief Details of Claim the claimant seeks specifically the following declarations:

In respect of the third declaration sought, and in the alternative to its primary contention that it is not a landlord within the meaning of section 2 of the 2014 Act, the claimant avers that it falls within the exceptions in section 5(1)(c) and section 8(1)(c) of the 2014 Act, though it does not ask the court to determine the point in these proceedings.

On behalf of Shelter, it is accepted that the claimant is the party able, in principle, to give notice and take possession proceedings under the 2016 Act. However, it is submitted that the attempt to drive a wedge between the meanings of “landlord” in the 2014 and 2016 Acts is unsustainable. Shelter contends that the claimant, when mortgagee in possession, will be the “landlord” for the purposes of the 2014 Act and will not be exempt from the registration and licensing requirements in that Act, with the result that it will not be able lawfully to give a landlord’s notice under section 173(1) of the 2016 Act until it is registered and licensed under the 2014 Act.

I mean no disrespect to counsel if I do not set out summaries of their arguments in support of their respective submissions. The discussion that follows will engage with the main points advanced, so far as I consider it necessary.

It is convenient to begin with the entitlement of the claimant to seek possession from the occupiers as contract-holders. This has not been raised as an issue in the proceedings, and the conclusion that a mortgagee in possession has in principle the ability to seek possession from a tenant is plainly correct. However, it is necessary to consider how this result is achieved under the 2016 Act.

The definition of “landlord” for the purposes of the 2016 Act is in section 244. The definition contains alternatives: (i) the person who is entitled to confer on an individual a right to occupy the dwelling as a home; (ii) the person who purports to be entitled to confer on an individual a right to occupy the dwelling as a home.

Mr James advanced the argument that, even if the claimant were not within the first alternative (the person who “is” entitled), it would ipso facto be within the second alternative if it served a landlord’s notice under section 173, as it would then be purporting to have the relevant entitlement. In my view, that cannot be right. Section 244(2) refers to “the” landlord and “the person that is …”, not “any person that is …” Similarly, section 173 provides, “The landlord … may end the contract …”; it does not say, “A landlord …” Section 173 also does not say, “Any person …”, although such wording would be appropriate if Mr James’s argument were correct. Section 173 also does not say, “may purport to end the contract …”. In my judgment, section 244(2) means that there is one landlord, and section 173 gives to that landlord the ability to end the occupation contract by notice. The parenthesis in section 244(2)—“(or purports to be)”—reflects the fact that, as between a lessor and a lessee, the lessee cannot dispute the lessor’s right to grant the tenancy. Thus, if, in the present case, the owners had been prevented by the terms of the mortgage from sub-letting the Property and therefore were not “entitled to confer on an individual a right to occupy the dwelling as a home”, they would nevertheless have been able to bring the occupation contract to an end by giving notice under section 173.

This brings us to the claimant’s primary case, which is that it is the landlord within the first alternative in section 244(2). The claimant’s position has, in my view, been inconsistent, as a result of its efforts to have things both ways. As mentioned above, the Brief Details of Claim seek a declaration that a “mortgagee in possession” is a landlord within the meaning of section 244. However, Mr James was at pains to press the case that the claimant had not done anything that might make it a landlord in common parlance: specifically, that it had not demanded rent from the occupiers. He therefore submitted that the “rather curious” definition in section 244 was sufficiently broad to mean that the claimant, though not a mortgagee in possession, was a “landlord” for the purposes of the Act, because it had obtained a possession order against the mortgagor and was thus entitled to confer on the contract-holders the right to occupy the dwelling as a home. Accordingly, even though the first declaration the claimant seeks is that a mortgagee in possession is a landlord under the 2016 Act, the argument advanced on its behalf attempted to establish that the claimant is a “landlord” under the 2016 Act without having become a mortgagee in possession.

Mr James relied on his contention that the 2016 Act is a “self-contained code” (skeleton argument, paragraph 67). That claim is correct only in a limited sense. Of course, the Act creates a new scheme for private housing rental in Wales and has its own definitions. But it does not exist in the abstract. In particular, section 244(2) does not answer the question, “Who is the person that is entitled to confer on an individual a right to occupy the dwelling as a home?” The answer to that question is to be found in the general law and is relatively simple. At its most basic, the person so entitled is the (freehold or leasehold) owner of the dwelling. Where the dwelling is mortgaged on terms that allow the owner as mortgagor to let the dwelling (a buy-to-let mortgage), the owner will be the person with the entitlement mentioned in section 244(2) until the mortgagee goes into possession; and from that point on the mortgagee in possession will be the person with the relevant entitlement.

Mr James did not identify any legal basis or authority for saying that, without going into possession, a mortgagee would be “the person that is … entitled to confer on an individual a right to occupy the dwelling as a home”, and I know of none. Mr James submitted that the claimant, though not being a mortgagee in possession, had such a present entitlement on account of its possession order against the owners. I consider that to be a case of trying to eat one’s cake and have it. Either the mortgagee is a mortgagee in possession or it is not. It is trite law that a legal mortgage gives to the mortgagee a legal estate in possession and that, unless the parties have agreed otherwise, the mortgagee is entitled to go into possession “before the ink is dry on the mortgage” (Four-Maids Limited v Dudley Marshall (Properties) Limited [1957] Ch 317, 320). The entitlement to go into possession is not the same as the exercise of the entitlement. If the claimant has gone into possession, it will be the person within the first alternative in section 244(2); but, as I explain below, it will also be the “immediate landlord” for the purposes of the 2014 Act. However, if the claimant has not gone into possession, the owners remain the landlords, both in accordance with normal common-law usage and for the purposes of the 2016 Act. (What it means for a mortgagee to go into possession is explained below.)

This conclusion is consistent with the Welsh Government’s guidance page, “Renting homes: frequently asked questions (landlords)”:

“What if the property is mortgaged and for whatever reason the mortgage lender wishes to gain vacant possession?

If the mortgage lender repossesses the property and becomes the landlord, they would then be able to issue a six-month Landlord’s Notice under a periodic standard contract.”

On that reading of the 2016 Act, the mortgagor is the landlord until the mortgagee becomes a mortgagee in possession (or, as the guidance puts it, “repossesses the property”; this does not refer to taking physical possession), at which point the mortgagee becomes the landlord. Mr James submitted (skeleton argument, paragraph 63) that the words in the guidance, “and becomes the landlord”, were “entirely unsupported by guidance, law or explanation.” That is wrong: the words are a straightforward application of the statutory definition of “landlord” to the consequences of the mortgagee going into possession.

The structure of section 244(2) does seem to me, I confess, rather inelegant, in consequence of the use of the parenthesis—“(or purports to be)”—to address the case of unauthorised lettings. As I have explained, the parenthesis must in my view relate to the purported right of the apparent landlord in respect of the tenant’s own occupation contract. However, the first alternative—“the person that is … entitled to confer etc.”—cannot be limited to the person who actually, with entitlement, granted the occupation contract: it must, for example, apply to the assignee of a landlord’s interest (cf. section 5 of the 2014 Act); and the claimant itself acknowledges that the first alternative must be capable of extending to a mortgagee whose mortgage was granted by the person who entered the occupation contract. This means that, unlike the second (parenthetical) alternative, the first alternative is prospective, in that it looks to the present entitlement of the person in question to confer occupation rights. Despite what I consider this inelegance of drafting, the provision seems to me to be easy enough to understand.

Accordingly, the definition in section 244(2) is in my judgment relatively straightforward. Its effect is that the person qualifying as landlord under either alternative in section 244(2) will be the person entitled to receive the rent from the holder of the occupation contract. In a case such as the present, that person will be the mortgagor, until the mortgagee exercises its right to possession; and from that time the landlord will be the mortgagee in possession. This interpretation of section 244 provides the basis on which the mortgagee can be entitled to claim possession from a tenant under section 173.

The position thus arrived at reflects the general legal position. Section 87(1) of the Law of Property Act 1925 provides:

“(1)

Where a legal mortgage of land is created by a charge by deed expressed to be by way of legal mortgage, the mortgagee shall have the same protection, powers and remedies (including the right to take proceedings to obtain possession from the occupiers and the persons in receipt of rents and profits, or any of them) as if—

(a)

where the mortgage is a mortgage of an estate in fee simple, a mortgage term for three thousand years without impeachment of waste had been thereby created in favour of the mortgagee; and

(b)

where the mortgage is a mortgage of a term of years absolute, a sub-term less by one day than the term vested in the mortgagor had been thereby created in favour of the mortgagee.”

Section 51 of the Land Registration Act 2002 provides:

“On completion of the relevant registration requirements, a charge created by means of a registrable disposition of a registered estate has effect, if it would not otherwise do so, as a charge by deed by way of legal mortgage.”

In Woolwich Building Society v Dickman [1996] 3 All ER 204, the owner of a flat had granted a tenancy of it and subsequently mortgaged the property. When the owner ran into financial difficulties and defaulted on the loan agreement, the mortgagee brought possession proceedings. The case was decided in the Court of Appeal on the grounds that consent forms signed by the tenants did not preclude them from relying on an overriding interest, so that the mortgagee had to satisfy the requirements of section 98(1) of the Rent Act 1977 if it were to get a possession order. At 213-214, Morritt LJ said:

“There can be no doubt that, subject only to the consent letters, section 98(1) would apply. The Building Society would undoubtedly derive title under the original landlord, Mr Dickman, so as to fall within the definition of landlord contained in section 152(1) (Footnote: ¹). Further the conveyancing machinery applied by section 27(1) of the Land Registration Act 1925 (Footnote: ²) and section 87(1) (b) of the Law of Property Act 1925 would create in the Building Society a lease of the same duration less one day as that vested in Mr Dickman and interpose it between that of Mr Dickman and the tenancy of the Todds. Thus, the Building Society would be entitled to the reversion immediately expectant on the Todds tenancy and the relationship of landlord and tenant would subsist between them so long as the mortgage was neither redeemed nor enforced by sale.

…

… At all material times before 15 September 1986 [the date of the charge] the Todds were tenants of Mr Dickman. On 15 September 1986 they did not surrender their tenancy, they did not charge it to the Building Society as further security for the loan and they did not vacate the Flat. The Building Society never asked them to do any of those things. Thereafter the Building Society did not receive the rent or formally recognise the tenancy of the Todds but it was quite content that they should remain in occupation of the Flat and in enjoyment of such rights as entitled them to do so unless and until the Building Society sought to exercise their rights as mortgagee. From 15 September 1986 to 12 July 1993, when these proceedings were commenced, the Todds remained in occupation of the Flat with the knowledge and consent of the Building Society.

…

In my view, the Todds’ tenancy remained an overriding interest notwithstanding the letters of consent. Thus, the charge to the Building Society took effect subject to it. It follows that the relationship of landlord and tenant between the Building Society and the Todds, which would clearly have arisen in the absence of those letters, came into existence on 15 September 1986 in spite of them. Therefore, the claim of the Building Society to possession of the flat falls within section 98(1) Rent Act 1977 and no amount of estoppel can take it out.”

Morritt LJ’s analysis might at first sight seem to support the conclusion that a mortgagee would immediately upon completion of the charge become landlord to an existing tenant and would by virtue of its interest automatically be landlord to the tenant under a subsequent letting by the mortgagor. However, the existence of the relationship of landlord and tenant fell there to be identified in accordance with the definition of “landlord” in section 152(1) of the Rent Act 1977. The definition in the 2016 Act is different and materially narrower, as I have explained.

Accordingly, I hold that from the time when the mortgagee “takes possession” of the tenanted property—that is, when it becomes the mortgagee in possession—it becomes the landlord for the purposes of section 244(2) of the 2016 Act and entitled to serve a notice under section 173.

The question then arises as to when the mortgagee becomes “in possession”. What constitutes possession?

The Law of Property Act 1925, section 205(1)(xix) provides that for the purposes of the Act:

“‘possession’ includes receipt of rents and profits or the right to receive the same, if any; and ‘income’ includes rents and profits”.

Fisher & Lightwood’s Law of Mortgage (15^th edition) states at para 29.8 (citations omitted, except for footnote 8):

“Where the mortgagor is in possession (and he is not a tenant of the mortgagee), the right [viz. the mortgagee’s right to enter into possession] is exercised by taking physical possession of the land, if that can be done peaceably, or by bringing an action for possession. The same applies where a tenant of the mortgagor, whose tenancy is not binding on the mortgagee, is in possession. The mortgagee need not give notice either before entering or commencing proceedings. If a tenant of the mortgagor, whose tenancy is binding on the mortgagee, is in possession, the right is exercised by notice to the tenant to pay the rent to the mortgagee. [Footnote 8: Horlock v Smith (1842) 6 Jur 478; Davies v Law Mutual Building Society (1971) 219 Estates Gazette 309.]”

(See also op. cit. at para 29.12.) To the same effect, again citing Horlock v Smith, is Megarry & Wade: The Law of Real Property (10^th edition), at para 24-025:

“If the property was already let to a tenant before the mortgage was made, or if a subsequent lease is binding on the mortgagee, the mortgagee cannot take physical possession; but may take possession by directing the tenants to pay their rents to him instead of to the mortgagor.”

In the present case, the claimant, being unaware that the Property had been let, sought possession by bringing possession proceedings against the owners. Although the possession order was by its nature good against the world, it was irregular, in the sense that the claimant had no entitlement to physical possession as against the occupiers, who were themselves not privy to the proceedings. Accordingly, the order was not enforced by the taking of physical possession. The question then is whether the commencement of the possession proceedings, or a fortiori the obtaining of a possession order against the owners, constituted the claimant as mortgagee in possession. In my judgment, it did not. Obtaining an order for possession is not equivalent to taking possession. One may obtain a possession order and not enforce it.

I have considered the line of cases dealing with (now rare) attornment clauses in mortgages, whereby the mortgagor becomes the mortgagee’s tenant. In brief, the cases held that a proviso in the attornment clause that the mortgagee might, after its power of sale had arisen, terminate the tenancy created by the clause by re-entry without notice meant that re-entry could be effected and the tenancy ended by service of a writ for possession. See, among other cases, Moore v Ullcoats Mining Co. Ltd. [1908] 1 Ch 575; Woolwich Equitable Building Society v Preston [1938] 1 Ch 129; and Canas Property Co. Ltd. v. K. L. Television Services Ltd [1970] 2 QB 433, per Lord Denning MR at 442. However, those cases, though involving the relationship between mortgagor and mortgagee, relate specifically to rights of re-entry under the lease created by attornment. I do not think that they permit any proper analogy with the situation, as in the present, where the issue is whether the mortgagee has effectively stepped into the shoes of the mortgagor vis-à-vis the tenant. I have not been referred to, and am not aware of, any case that is directly on that point, probably because the circumstances of the present case are liable only to arise when the mortgagee is under a misapprehension.

The method whereby a mortgagee may go into possession of a tenanted property is by receiving the rents, or at least by directing the tenant to pay the rents to it and not to the mortgagor. However, even where rent is being received by the mortgagee, it is the quality of the receipt that matters when deciding whether possession has been taken. In Noyes v Pollock (1886) 32 Ch. D. 53, the mortgagee received the rents of the mortgaged property from the mortgagor’s agent, who collected them and who had received from the mortgagee—though not actually passed on to the tenants—notices requiring the tenants to pay the rent to the mortgagee. The Court of Appeal held that the mortgagee’s receipt of the rents did not suffice to make it mortgagee in possession. Cotton LJ said at 60-61:

“There is no difficulty in ascertaining whether there has been actual taking possession of an estate by the mortgagees; but there has been a great deal of argument here as to whether what took place in the present case did not amount to an entering into a receipt of the rents and profits by the mortgagees. I think a consideration of what is the consequence of holding that the mortgagee is in receipt of the rents and profits, will throw light upon what is meant by such receipt. If the mortgagee is in receipt of the rents and profits the account is taken against him as if he were in possession, and he is answerable not only for what the tenants pay, but for not letting the property if he could have done so, and for not getting the full rents from the tenants if they could have paid them; and he is looked upon as if he had taken upon himself the control and management of the estate as between those in actual occupation and the mortgagor, so as to put an end to any right which the mortgagor has of dealing with the estate in the way of management, including letting and making allowances to tenants, and getting the best rent from them he can.

In order to hold that a mortgagee not in actual possession is in receipt of the rents and profits, in my opinion it ought to be shewn not only that he gets the amount of the rents paid by the tenants, even although he gets their cheques or their cash, but that he receives it in such a way that it can be properly said that he has taken upon himself to intercept the power of the mortgagor to manage his estate, and has himself so managed and received the rents as part of the management of the estate.”

Of course, the issue arising in that particular case was not the same as in the present case. There, the mortgagee was receiving the rents but only through the mortgagor, which by its agent had collected them. However, the mortgagee had taken the step of issuing notices to the tenants, telling them to pay rent to it and not to the mortgagor, although the mortgagor’s agent did not serve the notices as he had been requested to do. The actual decision was that the (rather limited) evidence did not establish that the mortgagee’s receipt of the rents was such as to show that it was depriving the mortgagor of the control and management of the property: see at 62. The need for the assumption of control and management is, in my view, the crux.

In Mexborough Urban District Council v Harrison [1964] 1 WLR 733, at 736-7, Pennycuick J referred with approval to the judgment of Cotton LJ in Noyes v Pollock and also to the following passage in Halsbury’s Laws of England (3^rd edition, vol. 27, p. 281):

“When a mortgagee takes actual possession of the property, there is no doubt as to his intention to take possession, and he thereby assumes the liability of a mortgagee in possession. When he gives notice to the tenants to pay their rents to him, it is equally clear that he intends to go into receipt of rents and profits, and this, as regards the liability to account, is equivalent to taking possession; and so, too, if the mortgagee gives notice to the tenants not to pay rent to the mortgagor … In order to burden himself with the liability of a mortgagee in possession, the mortgagee must act in such a manner as to substitute himself for the mortgagor in the control and management of the estate,”

I have also considered the fact that, having become aware of their presence, the claimant served on the occupiers a notice (now accepted to have been invalid by reason of the coming into force of the 2016 Act) under section 8 of the 1988 Act. In my view, this alone was insufficient to amount to going into possession. Although section 8 provides for the service of notice by the “landlord”, section 45(1) provides:

“‘landlord’ includes any person from time to time deriving title under the original landlord and also includes, in relation to a dwelling-house, any person other than a tenant who is, or but for the existence of an assured tenancy would be, entitled to possession of the dwelling-house”.

The evidence is that the claimant’s notice was specifically on Ground 2 in Schedule 2 to the Act (possession to enable mortgagee to exercise power of sale with vacant possession). The conditions for giving such a notice were (i) that the mortgagee must have acquired the power of sale conferred either by the mortgage deed or by section 101 of the Law of Property Act 1925 and (ii) that the mortgagee must require possession to sell with vacant possession in exercise of that power. In the present case, the power of sale had arisen under both the Mortgage Conditions and section 101. Service of the notice was in itself ambiguous and, in the absence of receipt of rent or a demand for rent, did not establish that the claimant had assumed management and control of the Property.

Accordingly, with regard to the facts of the present case, I hold:

This brings us back to the 2014 Act. The primary question is whether, upon becoming mortgagee in possession and so becoming the landlord for the purposes of the 2016 Act, the mortgagee is the immediate landlord of the contract-holder for the purposes of the definition in section 2(1) of the 2014 Act.

Mr James submitted that the claimant was not the immediate landlord; rather, the immediate landlord was the owners, who had granted the tenancy to the occupiers. In my judgment, that submission is correct on the facts, because (as I have held) the claimant is not a mortgagee in possession.

However, the submission would be wrong if the claimant were indeed a mortgagee in possession. Therefore I do not consider that the claimant is entitled to the second declaration sought (see paragraph 32 above).

The expression “immediate landlord” is a familiar one. It denotes the person who stands in immediate relationship with the tenant and is entitled to receive rent under the tenancy and obliged to perform the landlord’s obligations under the tenancy. The immediate landlord is distinguished from a “superior landlord”, who is any person further up the chain of lettings. Thus, for example, in Rakusen v Jepsen [2023] UKSC 9, [2023] 1 WLR 1028 (a case that concerned a statutory scheme and issues that were very different from those in the present case), Lord Briggs and Lord Burrows, with whom the other Justices agreed, held at [3] that Rent Repayment Orders under the Housing and Planning Act 2016 “cannot be made against a superior landlord, that is, a landlord higher up the chain of tenancies than the immediate landlord under the tenancy which generates the relevant rent.” Accordingly, in the present case, the owners would be the immediate landlord of the occupiers (if we ignore for a moment the mortgage), and Carmarthenshire County Council is the superior landlord.

Mr James’s submission, as I understood it, was that, even when a mortgagee was in possession, it would not be the immediate landlord of a tenant under a tenancy granted by the mortgagor. I disagree. From the moment of the grant of the mortgage, the mortgagee holds an interest that is interposed between those of the mortgagor and the tenant: see Woolwich Building Society v Dickman, supra. When the mortgagee goes into possession, it displaces the mortgagor vis-à-vis the tenant.

The rights of the mortgagee in possession in respect of a tenancy that is binding on it are explained in Fisher & Lightwood’s Law of Mortgage (15^th edition) at para 29-49 as follows (citations omitted):

“The mortgagee in possession is entitled to the rents and profits of the mortgaged property, by virtue of the legal or equitable ownership which the mortgage confers on him. The legal mortgagee is the reversioner expectant on any lease granted out of the mortgaged property and a legal chargee is placed in a similar position by s 87 of the Law of Property Act 1925. …

Where the tenancy was created before the mortgage, or is otherwise binding on the mortgagee, he will take possession by giving notice to the tenant requesting payment of the rent to himself. His title thereupon relates back to the date when his right first accrued, that is (unless the mortgage deed provides otherwise) on the grant of the mortgage. Thus, he can sue a trespasser for a trespass committed before he took possession. He also becomes entitled to and may distrain or sue for any rent in arrear at the date of his taking possession, and any arrears which have accrued since the mortgage, and also for any rent which subsequently falls due. He may sue a tenant claiming under an agreement for a lease made by the mortgagor. If, after the mortgage, the rent has been varied by agreement between the tenant and the mortgagor, the mortgagee is entitled to recover for the additional as well as the original rent. He will have priority over persons to whom, after the mortgage, the mortgagor assigned the rents.

…

After the mortgagee has taken possession, the mortgagor has no remedy against the tenant in respect of rent alleged to be due from him. That is the case even where the mortgagee has refused to ask for it. In the latter case, his only remedy is against the mortgagee on taking the accounts. Where rent falls due after the mortgagee has taken possession, but the tenant paid it prematurely to the mortgagor before it fell due, when the mortgagee goes into possession he may demand payment again. However, the position is otherwise where the advance payment was made before the mortgage: the payment then binds the mortgagee, since he should have inquired as to the terms on which the tenant was in occupation. The tenant cannot set off against the rent claimed by the mortgagee in possession a personal claim he had against the mortgagor.”

The corresponding position exists in respect of the landlord’s obligations under the tenancy. In respect of tenancies granted after 1995, see section 15 (1), (2) of the Landlord and Tenant (Covenants) Act 1995.

The fact that the right of the mortgagee in possession to the rent arises under a tenancy granted by the mortgagor does not militate against the conclusion that the mortgagee in possession becomes the immediate landlord by entry into possession. In another case involving a different statutory scheme, under which the expression “immediate landlord” was not used but where the definition involved the same conceptual framework already explained, Bankes LJ observed:

“‘Landlord’ is defined by s. 48, sub-s 1 of the Act of 1908 [the Agricultural Holdings Act 1908, since repealed; see now section 96(1) of the Agricultural Holdings Act 1986] as being ‘Any person for the time being entitled to receive the rents and profits of any land.’ That, of course, means the person as between landlord and the tenant, and, of course, it is obvious that, as dealings and transactions in the land take place from time to time, the same person is not necessarily at all times the landlord; one person may be the landlord at one moment, and after transactions have taken place with reference to the land, another person may become landlord at some subsequent moment, but the question under the statute is always the same, namely, whether the person claiming to be landlord is the person entitled as against the tenant to receive the rent and profits.”

(Tombs v Turvey (1923) 93 LJKB 785, at 787.) In the present case, the change of identity of the immediate landlord would come about by the taking of possession by the mortgagee.

Where a mortgagee in possession is bound by a domestic tenancy granted by the mortgagor, it will be subject to the requirements of registration and licensing in the 2014 Act, because it will be the immediate landlord of a dwelling subject to a domestic tenancy. The exceptions in section 5(1)(a) and section 8(1)(a) will apply; however, they are more in the nature of a period of grace than true exemptions from the requirements. In my judgment, the exceptions in section 5(1) (b) and (c) and section 8(1) (b) and (c) will not apply, because the landlord’s interest has not been assigned to the mortgagee but is an incident of its rights under the mortgage. I reach a corresponding conclusion in respect of section 44(2) of the 2014 Act: as the landlord’s interest has not been assigned to the mortgagee in possession, the disapplication for 28 days of section 44(1) does not apply.

The further question regarding section 44 that was raised before me (and, I know, has been raised in other cases) does not need to be answered in this case. That question is whether the prohibition in section 44(1) of the 2014 Act extends to landlords which are expressly exempted from the registration and licensing requirements in sections 4, 6 and 7. The issue is liable to arise, for example, in the case of a “community landlord”, as defined in section 9 of the 2016 Act; the definition is applied to the 2014 Act by section 49 of the 2014 Act. Such a landlord is capable of being landlord in respect of a periodic standard contract and is therefore permitted by section 173 of the 2016 Act to serve a notice terminating the occupation contract. Community landlords are exempt from the registration and licensing requirements in the 2014 Act: see sections 5 and 8. However, section 44(1) of the 2014 Act prohibits the giving of a section 173 notice if the landlord is not registered. In this example, would the community landlord have to become registered before it could give a section 173 notice, even though it was exempt from the registration requirement? I should have thought not. It seems to me that, to avoid absurdity, section 44(1) ought to be read subject to the exemptions from the registration and licensing requirements.

As I understood Mr James’s submissions, as developed in particular in paragraphs 95 to 115 of his skeleton argument and orally, the claimant’s particular concern is that, if section 44(1)(a) of the 2014 Act imposes a freestanding registration requirement (that is, independent of the requirement in section 4), the claimant will need to be registered in accordance with section 44 even if it is not required to be registered under section 4. As to this, I make two observations. First, if a mortgagee becomes entitled to serve a section 173 notice under the 2016 Act, it will be subject to the registration requirements in section 4 of the 2014 Act, for reasons already explained. Second, the claimant’s wider argument (that a mortgagee in possession is the landlord for the purposes of the 2016 Act but is not the landlord for the purposes of the 2014 Act) leads to a conclusion that highlights (to my mind) the problems with the argument. Take the present case. Once it is the mortgagee in possession, the claimant will be the person entitled under the 2016 Act to serve a section 173 notice. If it is not also the landlord for the purposes of the 2014 Act, the owner/mortgagor must remain the landlord for the purposes of that Act. Therefore (on this argument) the ability of the mortgagee to serve a section 173 notice would depend on the registration of the mortgagor. It seems to me that this is obviously not what is envisaged by section 44. When the section says that a notice of the specified sort—which are all landlord’s notices—“may not be given … if … the landlord is not registered”, it clearly means that the landlord may not give such a notice if it is not registered. The section does not envisage that the notices in question may be given by someone who is not the landlord, but only if the person who is the landlord (but who is not giving the notices) has maintained his registration.

I address separately Mr James’s submission that a requirement for the claimant to be registered under the 2014 Act before it could serve a section 173 notice under the 2016 Act would be an unlawful interference with its rights under Article 1 of the First Protocol to the European Convention on Human Rights (“A1P1”). The submission invited alternative conclusions: first, that the 2014 Act ought to be construed so as to avoid unlawful interference with the A1P1 rights, in accordance with section 3 of the Human Rights Act 1998 (“HRA”); second, that, if it could not be so construed, the court ought to make a declaration of incompatibility, pursuant to section 4 of HRA. The claim form did not include a prayer for a declaration of incompatibility.

A1P1 provides:

““Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

For the purposes of A1P1, “possessions” is construed broadly. In Kovecký v Slovakia 44912/98 [2004] ECHR 446, (2005) 41 EHRR 43, (a case concerning entitlement to inherit property that had been confiscated upon criminal conviction) the Grand Chamber of the European Court of Human Rights said at [35]:

“(c)

An applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions related to his ‘possessions’ within the meaning of this provision. ‘Possessions’ can be either ‘existing possessions’ or assets, including claims, in respect of which the applicant can argue that he or she has at least a ‘legitimate expectation’ of obtaining effective enjoyment of a property right. By way of contrast, the hope of recognition of a property right which it has been impossible to exercise effectively cannot be considered a ‘possession’ within the meaning of Article 1 of Protocol No. 1, nor can a conditional claim which lapses as a result of the non-fulfilment of the condition (see Prince Hans-Adam II of Liechtenstein v. Germany [GC], no. 42527/98, §§ 82 and 83, ECHR 2001-VIII and Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, § 69, ECHR 2002-VII).”

In Sporrong and Lönnroth v Sweden [1982] ECHR 5, (1983) 5 EHRR 35, the European Court of Human Rights said at [61]:

“[A1P1] comprises three distinct rules. The first rule, which is of a general nature, enounces the principle of peaceful enjoyment of property; it is set out in the first sentence of the first paragraph. The second rule covers deprivation of possessions and subjects it to certain conditions; it appears in the second sentence of the same paragraph. The third rule recognises that the States are entitled, amongst other things, to control the use of property in accordance with the general interest, by enforcing such laws as they deem necessary for the purpose; it is contained in the second paragraph.

The Court must determine, before considering whether the first rule was complied with, whether the last two are applicable.”

In Back v Finland (2004) 40 EHRR 48 the Court said at [52]:

“The three rules are not ‘distinct’ in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule. Each of the two forms of interference defined must comply with the principle of lawfulness and pursue a legitimate aim by means reasonably proportionate to the aim sought to be realised.”

The claimant’s contention is that, if the 2014 Act is construed in the manner set out above, its effect is either to prevent a mortgagee from realising its security (deprivation of possessions) or to require it to become a landlord as a condition of realising its security and thus to assume the liabilities and responsibilities of a landlord (deprivation or control of use of possessions). The skeleton argument for the claimant stated (paragraph 121):

“To be absolutely clear, this is not a challenge to the entirely proper and legitimate regime of regulating landlords in Wales: this is a far narrower challenge to the rationality and proportionality of the application of section 44 of the 2014 Act to the Claimant (and indeed to those who would otherwise fall to be exempted by sections 4 and 7 of the 2014 Act) and/or to a Regime [sic] which does not permit the holders of security to realise that security otherwise than by becoming a landlord.”

In my judgment, at this point the claimant’s argument immediately falls down. No challenge is made to the regime of regulating landlords in Wales. The complaint is that, on the interpretation of the 2014 Act to which the claimant objects, the mortgagee of tenanted property is subjected to the requirement of becoming a landlord as a condition of being able to realise its security. However:

Accordingly, in my judgment: (1) section 44 of the 2014 Act does not constitute any interference with the claimant’s A1P1 rights; (2) if it did constitute such interference, the interference would be justified for the very reasons that (as the claimant accepts) justify it in the case of any other domestic landlord.

Where a dwelling is let under an occupation contract that is binding on the mortgagee, once the mortgagee becomes mortgagee in possession it is the “landlord” in relation to that occupation contract within the meaning of section 244(2) of the 2016 Act.

In those circumstances, the mortgagee in possession is also the “landlord” within the meaning of section 2(1) of the 2014 Act.

As landlord for the purposes of the 2014 Act, the mortgagee in possession is subject to the registration and licensing requirements of that Act.

The provisions of the 2014 Act, as so construed, do not represent an unlawful interference with the A1P1 rights of mortgagees of domestic properties.

On the facts appearing from the unchallenged evidence, I find that the claimant is not yet the mortgagee in possession, because it has not yet demanded that the occupiers pay rent directly to it rather than to the owners.