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The Debt Respite Scheme & Landlords

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Debt Respite Scheme (Breathing Space)

To coincide with the Debt Respite Scheme (Breathing Space) coming into force on 4 May 2021, the Government published guidance intended to support creditors in understanding the regulations.

The following is intended as an easy-to-read look at the scheme for landlords. For full details and the most up to date information on Government regulations, please visit the Gov.uk website.

What is a breathing space? 

The legislation gives an individual in problem debt the right to legal protections.  Rent arrears qualify as problem debt so this will affect landlords in England and Wales.

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

A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors, plus freezing most interest and charges on their debts. 

A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and has some stronger protections. It lasts as long as the person's mental health crisis treatment, plus 30 days, no matter how long the crisis treatment lasts. 

Anyone who cannot or is unlikely to be able to repay their debts can apply to a debt adviser for a standard breathing space.

What this means for landlords

If you’re told that rent owed to you is in a breathing space this will be done by the Insolvency Service’s electronic notification or post - you cannot carry out any of the following actions until the breathing space ends:

  • Contact the tenant directly 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 benefits such as Universal Credit 
  • Start bankruptcy proceedings

These actions also apply to any managing agents appointed by you and you must tell these agents to stop any arrears chasing as soon as possible.  

A breathing space can only be started by a debt advice provider who is authorised to offer debt counselling by the Financial Conduct Authority (FCA) or a local authority. 

Debt advice providers are the point of contact for the debtor, their creditors and the Insolvency Service.

What a breathing space isn’t

A breathing space is not a payment holiday. While you cannot chase arrears where a breathing space has been granted the tenant should continue to pay their rent during that breathing space. You can continue to accept these payments. 

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Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551