New legislation being introduced in England and Wales from 4th May 2021.
Debt Respite Scheme (Breathing Space) – will no doubt be known as ‘breathing space’ regulations.
What does this mean?
The aim is to provide ‘breathing space’ to someone who is facing problem debt and gives them the right to legal protection from actions being taken to recover the agreed ‘breathing debt’.
Not all debt is covered. For a debt to be eligible for ‘breathing space’ status it has to be a ‘qualifying debt’; such as credit cards; store cards; personal loans; pay day loans; overdrafts; utility arrears and Mortgage or rent arrears.
There are two ‘types’ of breathing space:
Standard Breathing Space which provides 60 days ‘breathing space’ during which creditors can take no action to recover any debt, and
Mental Health Breathing Space which is only available to someone who is receiving mental health crisis treatment and the breathing space remains in place for as long as the person is in receipt of mental health crisis treatment, plus 30 days.
How could this impact Landlords?
Rent arrears fall into ‘qualified debt’. If a tenant believed they could apply for ‘breathing space’ then the first step is for them to meet with a FCA registered Debt Advisor. They (the debt advisor) will review the individual circumstances and see if ‘breathing space’ is appropriate. If they do then the ‘debt’ will be added to the breathing space register. It is important to note that the ‘person’ is not added to the register but the debt – so if an individual has more than one debt they wish breathing space to be applied, then each debt has its own entry.
You will receive electronic notification in writing of any debt where you are the creditor clearly stating the date the debt was added and the date the breathing space is lifted.
What happens during the breathing space?
No action can be taken to recover or pursue the debt.
Put simply, if you are a Landlord and receive notification that your tenant’s rental arrears debt has been added to the register then you are not allowed to do anything to pursue that debt and a notice to take possession of your property on the grounds of rent arrears cannot be issued.
Is your tenant struggling to pay the rent? Are they in arrears? Have you set up a payment plan? Do you know what to do next or what the law allows you to do? Please contact the office if you need help with any of these queries. We are here and ready to help. Gemma Scott-Davies, firstname.lastname@example.org 01474 321957.