‘Breathing space’ is not a payment holiday
Landlords frustrated and left out of pocket by the impact of the pandemic on their ability to evict problem tenants, are unlikely to be cheering the introduction of the new debt respite scheme that came into force yesterday. This adds a further two month delay to the process while tenants in arrears are given time to sort out their finances.
The Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 were approved by Parliament last October. The new rules mean that people dealing with problem debt including rent arrears, following an assessment by an FCA approved debt advisor, are now entitled to a 60 day ‘breathing space’ that pauses any enforcement action by their creditors. During that time they cannot be approached by anyone to whom they owe money to discuss the debt or any interest payments owing.
This potential additional delay will be viewed as bad news by landlords who have been unable to pursue tenants in arrears through the courts due to Covid restrictions. However, there are two important points to note.
First, breathing space is not a payment holiday. Tenants must still pay their rent. If these payments are not made, the breathing space arrangements can be brought to an end. The respite is from debt collectors letters, additional charges and interest payments, not from regular financial obligations. So if you are informed that one of your tenants is in a breathing space, unless you have permission from the court, you or anybody acting on your behalf must not:
- take any enforcement action against the debtor or anyone who is jointly liable with them for a breathing space debt
- contact the debtor to request repayment of that debt
- take any step to recover that debt
Second, landlords must make sure they are up to speed with their obligations under the new regulations. Breathing space information must now be included with eviction notices served under Section 8. Failure to do this could mean that your case, when it does come to court, could be thrown out on a technicality.
Author : Maryanne Bowring
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