The Debt Respite Scheme (also known as Breathing Space) created
in May this year, prohibits banks and landlords from chasing unpaid
debts and rent, and offers tenants a period of time to try and find
a solution to their financial problems. This will directly impact
landlords and lettings agents – particularly those seeking possession
of property due to rental arrears.
There are two types of breathing space that a tenant may enter into:
• a standard breathing space
• a mental health crisis breathing space.
For the most part, both types of breathing space operate in the same
way. Creditors are not allowed to contact debtors directly to request
payment of the debt, or take enforcement action to recover the debt
(including by taking possession of a property).
The duration and frequency of the breathing spaces vary. A ‘standard’
arrangement will last for a maximum of 60 days, however, a mental
health crisis breathing space ends 30 days after the tenant’s treatment
for mental health issues, ends.
Local authorities providing debt advice and FCA approved debt
advisors can grant Breathing Spaces to people who are in debt –
they would be expected to speak to them to establish whether this is
the best solution for them.
If the tenant is in a position to pay off the money they owe through
financial budgeting or by other means of raising funds, such as
selling possessions, then a Breathing Space may not be deemed the
right solution for them. However, if a Breathing Space is thought to
be the most appropriate way forward, their name will be added to
an electronic record and their creditors will be notified, although the
decision can be challenged.
It is worth noting that secured debts aren’t covered by Breathing
Space rules, so your mortgage lender would still expect to receive
mortgage payments from you during the period that your tenant is
in a Breathing Space.
You may continue to contact your tenant about anything not
related to the debt. For example, arranging repairs or inspections
for electrical or gas safety checks. In addition to this, if the tenant
has asked to talk to you about their rental arrears or is proposing a
solution, then you can answer their enquiries.
If you would like further guidance on the Breathing Space
scheme and how this may affect you please don’t hesitate
to contact our award-winning team. (See article ‘Impact of
Breathing Space on Section 8 possessions’ on our Blog)