Debt Respite Scheme

The Debt Respite Scheme, otherwise known as breathing space, is a plan from the government designed to give someone in problem debt the right to legal protections from their creditors. Although the scheme does not come into force until 4 May 2021 it is important to note that these regulations will apply to all rent arrears regardless of when the rent arrears were incurred, including arrears accrued since the beginning of the pandemic in 2020.

Within the scheme, there are two types of breathing space that someone can be given. The first type is a standard breathing space and the second is in the case of a mental health crisis. The GOV.uk website states that ‘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 and contact from creditors and freezing most interest and charges on their debts. A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).’

A tenant is required to seek and obtain advice in connection with the problem debt from an approved DAP (Debt Advice Provider) who will assess and initiate the scheme.

As a landlord you are classed as a creditor. If you have tenants in rent arrears and have been informed that the debt owed to you is now in breathing space, you have to stop all action related to that debt and apply the protections. These protections must stay in place until the period of breathing space ends. Tenants are required to continue to pay their rent during the moratorium to ensure their debt does not continue to increase, if they fail to do so, the tenant can run the risk of the breathing space being cancelled. During a standard breathing space, DAPs are required to carry out a check halfway into the breathing space to satisfy themselves that the debtor is complying with their obligations. If the tenant has not met their obligations they can cancel the standard breathing space in respect of some or all the debts. Creditors, including landlords, who are unhappy with the breathing space can ask within 20 days of it starting for it to be reviewed by the DAP, they will likely do so during the midway review. After this review, if the creditor is still unhappy with the decision and wishes the breathing space to be cancelled, they must inform the DAP and apply to court within 50 days of the breathing space commencing.

If you need to find out more about this scheme check out this page on the GOV.uk website.