The Debt Respite Scheme (Breathing Space) - How will this affect me as a Landlord?

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21 May, 2021

What is the Debt Respite Scheme?

The Debt Respite Scheme (Breathing Space) which came into force on 04 May 2021, gives someone in debt, the right to legal protection from their creditors through a 'breathing space'.

There are two types of breathing space: a standard breathing space and a mental health crisis breathing space.

A standard breathing space provides a debtor with the above protection from creditor action for up to 60 days, whilst a mental health crisis breathing space provides a debtor with the above protection from creditor action for as long as the debtor's mental health crisis treatment, plus 30 days.

A breathing space can only be started by a debt advice provider who is authorised by the Financial Conduct Authority to offer debt counselling or a local authority where they provide debt advice to residents.

Who is eligible?

To be eligible for a standard breathing space, a person must:

  • be an individual
  • owe a qualifying debt to a creditor
  • live or usually reside in England or Wales
  • not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply
  • not already have a breathing space, and not have had a standard breathing space in the last 12 months at the time they apply
  • cannot, or are unlikely to be able to, repay all or some of their debt as it falls due.

To be eligible for a mental health crisis breathing space, a person must:

  • be an individual
  • owe a qualifying debt to a creditor
  • live or usually reside in England or Wales
  • not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply
  • be receiving mental health crisis treatment at the time of the application
  • cannot, or are unlikely to be able to, repay all or some of their debt as it falls due.

What is a qualifying debt?

Most personal debts and liabilities are qualifying debts. This includes rent and service charge arrears owed by a tenant to their landlord.

There is no limit on the amount of any individual debt, or total debt, that can be protected by a breathing space.

However ongoing liabilities, such as future rent and service charge, do not count as qualifying debts and should continue to be paid by the tenant during the breathing space.

What should and shouldn't a Landlord do during a breathing space?

As a landlord, you may receive notification that a tenant has received breathing space by electronic communication (if you have opted into the electronic service), by post or by someone leaving a copy of the notification at your address.

Upon notice that the tenant has received breathing space, the landlord must:-

  • Record the notification and identify the debt owed to you by the tenant.
  • Notify any agents acting on your behalf of the breathing space.
  • Notify the court or tribunal of the breathing space in writing so they can implement the appropriate protections if recovery action is already ongoing.

Upon notice that the tenant has received breathing space, the landlord/landlord's agent must not:-

  • Apply any fees, penalties, charges and interest relating to the qualifying debt for the duration of the breathing space.
  • Making contact with the tenant regarding the rent/service charge arrears owed.
  • Take court action to recover the rent/service charge arrears (This includes enforcing judgments, starting any action or legal proceedings, applying for judgment in default, serving notice to take possession of a property due to rent/service charge arrears, or taking possession of a property).

A landlord can challenge a breathing space that has been granted to a tenant by requesting a review from the debt advisor. If a landlord wishes to make a challenge, this must be done within 20 days of receiving notice of the breathing space. Where a debt adviser refuses to cancel the breathing space following a challenge, a landlord may apply to the court.

Further information

The relevant legislation is The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 and further guidance can be found on the government website.

For more information contact Samantha Abdoollah in our Dispute Resolution department via email or phone on 01254222456. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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