- Fri 21 May 2021
In the current financial climate, sadly many tenants may be struggling to pay their rent and arrears can accrue as a result. In these circumstances it would seem reasonable to assume a landlord or agent may pursue the tenants via a variety of means to recover the unpaid rent. Or is it that simple…..?
On the 4th May 2021 the Debt Respite Scheme came into effect. The correct title of the Scheme is "Debt Respite Scheme (Breathing Space Moratorium & Mental Health Crisis Moratorium) (England & Wales) Regulations 2020" but is now more commonly known as 'breathing space'. Said Scheme gives people in problematic debt, the right to legal protection from their creditors and provides those affected the breathing space needed to pay off their debts.
There are two types of breathing space: standard breathing space and mental health crisis breathing space.
The 'standard' breathing space is available to anyone experiencing problem debt. This breathing space gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors, while freezing most interest and charges on their debts.
The 'mental health crisis' breathing space has some stronger protections, and is only available to those receiving mental health crisis treatment. This breathing space lasts throughout the person's mental health crisis treatment, plus an added 30 days (no matter how long the crisis treatment lasts).
It is worth noting that these breathing spaces are not payment or rent holidays. Whilst a landlord cannot enforce a debt during a qualifying relevant period, it does not relieve a tenant of their obligation to pay their debts and sums for which they are held liable.
So, how does a tenant apply for a breathing space if they're struggling to pay their rent or bills? In short, a tenant would have to approach a debt counselling specialist whom is authorised by the Financial Conduct Authority (FCA), who will decide whether to grant breathing space. Their decision will largely depend on whether the applicant has an income or has any assets that could be sold to cover the debt if needed. For mental health crisis applications an Approved Mental Health Professional (AMHP) will also need to confirm that the applicant is in treatment.
Where a tenant is granted breathing space following an appropriate assessment, landlord or agents will receive notification confirming the start date of the qualifying period thus allowing diarisation of the date enforcement action may recommence. In all cases the breathing space should be used by a tenant to arrange payment plans to consolidate their debts into an affordable monthly payment. During the breathing space period, the debt advisor is the single point of contact for all parties involved throughout the process, should a landlord or agent have any questions or queries.
Finally whilst landlords and agents cannot contact the tenant during the breathing space period regarding the qualifying debt, they can contact regarding separate matters such as maintenance or safety checks.