On the 4th May 2021, the Debt Respite Scheme or so-called ‘Breathing Space’ law will come into effect in England and Wales. This scheme will ban creditors (including landlords) from contacting debtors for unpaid debts for a set period to allow them the opportunity to find a solution for their financial issues. 

Let’s look at this in more detail and exactly what this will mean for landlords when it comes into effect.

What is the ‘Breathing Space’ scheme? 

The Debt Respite Scheme is designed to give people in problematic amounts of debt the right to legal protection from their creditors for up to 60 days. It provides individuals with some time and space to find a way to pay off their debts, and this can include unpaid rent. 

Breathing Space can be granted by local authorities who provide debt advice and FCA approved debt advisors. The Government is clear that this is not a payment holiday and will only be granted in extreme circumstances. 

There are two types of Breathing Space that an individual may enter into – a ‘standard’ Breathing Space and a ‘mental health crisis’ Breathing Space. Both kinds of Breathing Space have the same meaning for both debtors and creditors, although they cover different periods. A ‘standard’ arrangement will last for a maximum of 60 days, while a ‘mental health crisis’ arrangement ends 30 days after the tenant’s treatment ends. 

 

What does this mean for landlords?  

Breathing Space will have an impact on landlords who are owed money from tenants. If a tenant is granted a Breathing Space order, they will be given a 60-day break where enforcement action cannot be taken, and contact from creditors is paused. Interest and charges on the debt will also be frozen during this time. 

During this time, debtors are still legally required to pay their debts and liabilities, so tenants in debt must pay debts owed to their landlords.  

Landlords who have tenants who are granted Breathing Space will be notified electronically or by post, which will include the date from which the Breathing Space order will begin. 

Once notified that your tenant has entered into a breathing space, you, or your agent, must not do any of the following until the breathing space has ended: 

  • Contact the tenant directly about the debt
  • Obtain a warrant in relation to the debt
  • Serve a notice seeking possession because of the debt
  • Sell on the debt to a third party
  • Charge interest on the debt over the period covered by the breathing space
  • Apply for a judgement in relation to the debt
  • Enforce an existing money judgement for the debt
  • Take control of the tenant’s belongings during the breathing space 
  • Request third party deductions from Universal Credit or other benefits
  • Start bankruptcy proceedings

During a Breathing Space period, landlords are still permitted to contact their tenants regarding topics that are unrelated to any outstanding debts, so tenants can be contacted for things like maintenance issues or repairs. 

Crucially, during Breathing Space, landlords can respond to their tenants if they are contacted directly to discuss their debts. So, whilst a landlord can’t reach out to their tenant to discuss debt, if the tenant contacts the landlord about the debt, they are free to discuss it. 

For more information about the Breathing Space, please visit the NRLA website.

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