Jan

Breathing Space scheme: Landlords with ‘problem debt’ tenants face new hurdles after May 4th

admin

Landlords face more eviction hurdles after May 4th when a government scheme to protect people who have ‘problem debt’ comes into force.

As the NRLA highlighted earlier this week, although the scheme was meant to cover banks and other large lenders, it believes tenants
will be included in the scheme.

Although only applicable to the most serious debt cases, the scheme – which was announced in July but will only go live in May – will complicate both the evictions process and how landlord interact with guarantors.

It is also feared that tenant advocacy groups such as Shelter will encourage tenants who have built up rent arrears to use the new regulations to fend off attempts by landlords to recoup rental debt.

Called the Debt Respite or ‘Breathing Space’ Scheme, it is designed to protect a variety of people who may have built up problem debt caused by the pandemic.

Breathing spaces

“These breathing spaces come in two forms – standard and mental health,” says Mike Morgan of HF Assist and Mediation.

“A standard breathing space means landlords cannot contact a tenant to collect rent arrears for 60 days, while a mental health breathing space lasts for 30 days or until the ‘mental health crisis’ ends.

“One problem is that this latter part of the scheme is open ended – tenants can enter multiple mental health crisis Breathing Spaces almost indefinitely if an approved professional agrees.”

But the scheme is not the debt free-for-all landlords imagine – a Breathing Space must be approved by either local authority, charity or FCA-approved debt advisors.

But once they are, landlords’ hands are tied; they cannot serve a Section 8 eviction notice, apply for a warrant or money judgement or receive a possession order.

“Also, during a Breathing Space, landlords should not contact the tenant to ask for payment of the debt,” says Morgan (pictured).

“But mediation can continue during this process, albeit between the landlord and the tenant’s debt counsellor.”

The scheme will be administered by the Insolvency Service, which will notify landlords if their tenants has successfully entered the Breathing Space scheme.”

View Full Article: Breathing Space scheme: Landlords with ‘problem debt’ tenants face new hurdles after May 4th