The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the ‘Regulations’) are now in force. They give someone in problem debt legal protections from their creditors.
The Regulations will apply where tenants owe arrears of rent to their landlords…
So, what is a ‘breathing space’?
There are two types of breathing space: a standard breathing space and a mental health crisis breathing space.
Standard 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 by creditors, such as a landlord enforcing a Possession Order based on rent arrears; and
- Contact from creditors about a debt, such as a landlord sending a Letter of Claim threatening court action over rent arrears.
Mental Health Crisis Breathing Space
A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment. It lasts for as long as the person’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
And, when will a breathing space apply?
Debtors can only access a breathing space by seeking debt advice from a debt adviser.
Anyone who cannot or is unlikely to be able to repay their debts can apply for a standard breathing space.
Although all applications must be considered, a breathing space might not be appropriate for a debtor. For example, where they have savings or money available to them from another means.
A standard breathing space will usually end 60 days from the date it began.
And, to what debts does a breathing space apply?
Debts included in a breathing space must be ‘qualifying debts’, which are basically any sum of money owed by the debtor to a creditor: for landlords, this will include rent arrears owed by a tenant.
You should note that qualifying debts can include any rent arrears that your tenant owed before 04/05/2021. In addition, even if only one joint tenant applies for a breathing space, the joint rent arrears will become a breathing space debt and the Regulations will apply.
However, the Regulations will not extend to a guarantor. You can therefore still seek to recover the rent arrears via that means.
Whilst new arrears incurred during a breathing space will not be protected, it is likely that your tenant failing to pay rent during this period will result in the breathing space being cancelled and other solvency options being considered. The point of the breathing space is to give tenants in rent arrears space to allow them to budget and plan to better manage their finances!
So, what can a landlord not do during a breathing space?
If you are told that rent arrears owed to you are in a breathing space, you must stop all enforcement action related to them. This applies until the breathing space ends (up to 60 days).
Enforcement action which a landlord may intend to take in relation to rent arrears, and which is banned during the breathing space includes:
- Contacting your tenant about the enforcement of a breathing space debt, such as writing to them about the debt.
- Serving a section 8 notice on the grounds of rent arrears due up to the start of the breathing space.
- Starting any action or legal proceedings against your tenant, such as possession proceedings based on rent arrears (grounds 8, 10 and/or 11).
- Seeking to enforce a judgment or order unless you have the Court’s permission, such as a CCJ within a Possession Order.
- Obtaining a warrant or writ, such as for possession or debt enforcement.
- Selling or taking control of your former tenant’s property or goods, such as a warrant for control of goods.
If you have already started court proceedings relating to a debt that is put into a breathing space (such as possession, obtaining a CCJ or enforcing a CCJ), you must tell the court in writing as soon as you receive notification of the breathing space.
However, possession proceedings can continue until the court makes an order – therefore you can still obtain your Possession Order, you just cannot execute it via a Warrant. And, all existing legal proceedings can continue when the breathing space ends, so you basically just have to wait until you can apply for a Warrant for Possession.
In addition, if the time limit for enforcement of or new legal claims related to a debt ran out during the breathing space, this is extended to eight weeks after it ends. For example, if a section 8 notice expires during the breathing space, you can still issue a claim for possession within the extended deadline.
And, does my tenant still have to pay rent?
A breathing space is not a payment holiday! Whilst you cannot enforce a breathing space debt during a breathing space, your tenant is still legally required to pay their liabilities, i.e., rent. You can and should continue to accept rent.
So, what happens if I breach the breathing space?
- Any action you take is null and void, such as issuing court proceedings; and
- You may be liable for your tenant’s costs, such as legal costs in disputing your claim.
And, what happens after the breathing space ends?
When a breathing space comes to an end, you can:
- Take action in relation to the arrears, including contacting the debtor, issuing, or enforcing proceedings; and
- Start or continue any legal proceedings relating to the debt.
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