April 29, 2021 | less than a minute read

What does the debt Breathing Space scheme mean for landlords arrears?

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Helen Tucker

Partner

Get in touch

Helen Tucker

Partner

My colleague Emilie Pownall highlights in her ebriefing below the impact of this new Breathing Space scheme that starts on 4 May 2021. This could have a wide-ranging impact on landlords arrears recovery as tenants in debt will no doubt be advised to see an authorised FCA debt advisor who can grant Breathing Space. It then lasts for 60 days and prevents the landlord from taking any enforcement action or even contacting their debtor.

There is also a Mental Health Crisis Breathing Space, which lasts for as long as someone is receiving mental health crisis treatment.

Persons who already have a debt relief order, an IVA or are bankrupt do not qualify.

Landlords will need to review their debt collection policies urgently, to ensure they can identify when breathing space has been granted and to ensure they comply with its terms.

From 4 May 2021, The Debt Respite Scheme (Breathing Space) comes into force. This scheme provides debtors with the right to legal protection from their creditors. One of the eligible debts which allows the Breathing Space scheme to be triggered is rent arrears. This will undoubtedly impact landlords and their ability to pursue possession action and/or recover unpaid rent arrears in those cases where arrears have accrued. What is Breathing Space? There are two types of Breathing Space: Standard Breathing Space is available to anyone with problem debt. It provides them with legal protection from creditor action for up to 60 days. The protection includes pausing most enforcement action, contact from creditors and freezing most interest charges on the debt. Mental Health Crisis Breathing Space is ONLY available to someone who is receiving mental health crisis treatment. It lasts as long as the person’s mental health crisis treatment is ongoing, plus an additional 30 days. There is no maximum limit to how long the treatment can last. A number of people can contact a debt advisor on beh...