Call us on 0808 501 5150
We're available to take your call until 5:30pm weekdays and 5pm on Saturdays.
Sell Your Property Fast: Get A Free Property Valuation You Can Trust

OUR COVID-19 RESPONSE

Read about our safe and responsible service.

Contact us for an online valuation, an online property tour, more information on any property, or mortgage information.

Laura Gittins
01/02/2021 16:19
New breathing space law - eight key questions answered for landlords
In recent years, landlords have become well-accustomed to dealing with new government regulations to comply with.
 
Despite the ongoing pandemic, a range of rules were introduced last year - including mandatory electrical safety checks - and 2021 looks to be no different.
 
Earlier this month, the government announced the details of its latest initiative for the private rental sector (PRS) - the Debt Respite Scheme.
 
The new rules, which will become law on May 4 2021, aim to tackle the issue of problem debt and provide consumers with increased protection from creditors.
 
Known also as 'breathing space', the Debt Respite Scheme will apply to the rental sector and set new rules for landlords whose tenants build up significant arrears.
 
Over the last year, the impact of the pandemic has highlighted the issue of rent arrears as more tenants than usual have struggled to meet their rental payments.
 
Rent arrears have knock-on financial consequences for landlords if they don't have the right level of protection and processes in place.
 
With the new breathing space rules coming into force in just a few months' time, we have provided answers to eight key questions landlords may be asking at the moment...
 
1. What is the Debt Respite Scheme?
 
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium)(England and Wales) Regulations 2020 come into force on May 4.
 
If people find themselves in debt, such as rent arrears, the regulations mean they can be provided with 'breathing space' - a period in which creditors such as landlords must stop contacting them about their outstanding payments.
 
If a tenant has racked up serious rent arrears they can apply for standard breathing space from a debt advice provider, either someone approved by the Financial Conduct Authority or their local council.
 
2. What happens if my tenant is granted breathing space?
 
A standard breathing space can last for up to 60 days and provides the individual with legal protection from creditor action. During this time landlords are prohibited from serving a Section 8 eviction notice or making any contact in relation to the debt owed by the tenant.
 
They must also refrain from sending any type of demand letter relating to the debt or adding late payment fees or interest to the amount owed.
 
If court proceedings against the tenant have already started, they must not be progressed during the breathing space. Issuing any legal proceedings that relate to the debt is also outlawed.
 
4. Can I communicate with tenants if they have breathing space?
 
Although you can't speak to tenants about their debt during a period of breathing space, you are free to communicate about unrelated issues such as repairs, maintenance, inspections and so on.
 
If one of your tenants has breathing space and wants to discuss their debt with you, the law allows you to answer any questions they may have.
 
5. What is a mental health crisis breathing space?
 
As well as standard breathing space, tenants can also be granted a mental health crisis breathing space. This is reserved for individuals who are receiving recognised mental health crisis treatment.
 
The same rules apply, however the breathing space will last as long as the treatment is ongoing plus an additional 30 days.
 
6. Do tenants with breathing space have obligations to meet?
 
Renters can only apply for breathing space once in a 12-month rolling period. If they are granted protection, they are still required to meet their existing liabilities such as paying rent (within reason) and adhering to their tenancy agreement.
 
Breathing space will be reviewed between day 25 and day 35 of the 60-day period and the debt advice provider could cancel the protection if the tenant fails to meet their obligations.
 
The breathing space will also be cancelled if an alternative debt solution has been arranged. 
 
Individuals won't be eligible for breathing space if they are already subject to an interim order, IVA, Debt Relief Order or an undischarged bankrupt.
 
7. Am I still required to pay my buy-to-let mortgage if my tenant has breathing space?
 
Yes, the National Residential Landlords Association has confirmed that landlords' financial commitments are not exempt from the Debt Respite Scheme.
 
This means you would be required to continue repaying your buy-to-let mortgage in the event one of your tenants was granted breathing space.
 
8. Will the new law affect my rent guarantee or insurance?
 
It's unlikely that the new rules will affect any rent guarantee or legal expense cover you have in place. The likelihood is that if you claim on a policy during a period of breathing space, it will be honoured and you will receive payments.
 
However, it is best to check with your insurer or rent protection provider ahead of the new rules being introduced in May to get the full details of how your cover could be affected.
 
You can see the full government guidance here and the NRLA’s guidance here. If you have any further questions about the Debt Respite Scheme or any part of the lettings process, please get in touch with our experienced team today.

Here at Farrell Heyworth, we are currently doing all we can to help our landlords and tenants navigate Covid-19 restrictions safely. You can read more about our safe and responsible service here.

We encourage all our customers to register with our My FH portal, which will give you access to the most up-to-date information; remotely and at your convenience.

Meanwhile, you can find out how much your property could be worth on the local rental market by requesting a free and instant online valuation.