Breathing Space…
A few months ago the government introduced a scheme to help people in debt access the support they need to address the debt and find a way to repay it. The Scheme is called Breathing Space and as a Landlord it could impact you directly.
Breathing space lasts for 60 days unless cancelled earlier by a debt adviser or court. In those 60 days the debtor works with their advisor to put together a solution to repay the debt.
If you have a tenant with rent arrears and are notified they have entered breathing space, you must stop all action to retrieve the arrears until the breathing space ends. You must then identify the debt owed to you by that debtor as soon as possible. Most importantly, you must not contact the debtor directly about the debt until the breathing space ends. The debt is effectively frozen for the duration of the breathing space.
Whilst it may seem like a scheme that could be misused, a breathing space can only be started by a debtor seeking advice from an FCA authorised debt advice provider, who decides if a breathing space is appropriate. Responsibility for administering the breathing space is also the responsibility of the debt adviser.
If you do need to discuss the debt, you should contact the debtor’s debt adviser. These discussions would hopefully take place to discuss a debt solution.
One important thing to note is that breathing space is not a payment holiday so someone in breathing space is expected to keep paying their ongoing liabilities, including their rent. If they don’t, a debt adviser could cancel the breathing space at the midway review (undertaken between day 25 and 35).
When a breathing space ends, you can start applying interest and fees from that date but you cannot back date them unless a court orders you can.
It seems this scheme is intended to help prevent the spiral of debt some people find themselves in, where fees and interest accruing on unpaid debts make repayment seem impossible. As it is a new scheme, it is too early to say whether it will be successful.
As Landlords, our only recourse for rent arrears currently is applying to the Court, which more often than not is too costly to be worthwhile pursuing. Only time will tell if this is a more timely and successful way for rent arrears to be repaid.