The government is introducing a Debt Respite Scheme, to give someone with a problem debt legal protection – much to the frustration of landlords. This month, Anna Pettinger outlines how this may affect tenants…
I’ve heard the government is increasing its support to people in debt due to the coronavirus pandemic. Will this buy my tenants even more time to pay their outstanding rent?
Covid-19 has put pressure on household finances across the UK and plunged many tenants into significant rent arrears. To recognise this, the government is giving new legal rights to debtors, protecting them from being chased by creditors.
From May this year, landlords, letting agents and others who are owed money by individuals, will have to respect new ‘breathing space’ laws, otherwise known as the Debt Respite Scheme.
According to the government’s website, there will be a standard breathing space and a mental health crisis breathing space. The latter will only be available to a tenant who is receiving recognised treatment from an approved mental health professional and unlike the standard breathing space, it will last as long as the treatment, plus 30 days afterwards.
During a standard period of breathing space, rent demands cannot be sent to tenants requesting payment (or any part) of the arrears, including interest, fees or costs for a period of 60 days (limited to one period within a year).
Landlords and agents cannot serve a Section 8 notice citing one of the three possession grounds for arrears, if they are aware a tenant is in a period of breathing space. Section 21 notices can still be served and enforced, but that is cold comfort if your tenants are in serious debt.
It is understood that it will be an absolute requirement of a debt moratorium that the tenant benefiting from the breathing space continues to pay rent.
Who will be eligible for breathing space?
Breathing space will not be offered to tenants, unless they have an overall ability to actually clear the debts. In other words, it can’t be used to simply delay the inevitable (being evicted).
If a tenant fails to pay their ongoing rent, you will have the right to contact their debt advice agency and ask for the moratorium to be cancelled. If the cancellation is declined, you can apply to the court to end it and permit an eviction. Thankfully, this means that if there are no real prospects of recovering the rent arrears, you are not left helplessly waiting another six weeks to take action.
If you are informed by your tenant or advisers that a breathing space is being applied, you must stop all action relating to their debt. Although it is unclear, it is presumed that if court proceedings have commenced, to obtain possession of a property, they must be stayed until the breathing space is over.
Although May is still a few months away, it is worth considering issuing court proceedings sooner rather than later and we are happy to discuss your options with you. For more information, don’t hesitate to contact me. Email: anna.pettinger@tayloremmet.co.uk
0 Comments