LANDLORDS: The ‘Breathing Space’ scheme which aims to support tenants in debt has come into force and may affect you at some point.
By Wayne Beecham | Created on 5th May 2021
Changes have been made to eviction legislation that will affect letting agents and landlords in England and Wales.
On 4th May 2021, ‘Breathing Space’ a government led scheme which is designed to shield people in problem debt launched. The scheme will help tenants through financial crisis and will see most penalty and interest charges frozen, as well as enforcement action postponed. It is estimated that up to 700,000 people could be helped by the scheme in its first year.
Letting agents have an important role in educating landlords about the scheme that will give debtors (tenants) legal protections from their creditors (letting agents and landlords) for up to 60 days.
Depending on their situation, debtors will receive professional advice to create a plan to get their finances back on track. Those undergoing mental health crisis treatment will receive additional protections and support.
Letting agencies need to be aware of the scheme not only to help landlords manage any arrears while remaining compliant, but because the scheme applies to most debts accrued before or after 4th May, including rent arrears.
Agents need to ensure their paperwork is up-to-date to include the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) and when creditors, such as landlords are notified about a moratorium debt, they must pause enforcement action and freeze charges, fees and certain interest for the duration of the moratorium.
Where a tenant successfully applies for a Breathing Space and has included rent arrears in their application, then the landlord will be notified by the Insolvency Service. In these circumstances it means agents and landlords must put on hold any action being taken in relation to rent arrears (including court action) for as long as the Breathing Space lasts. In addition, a Section 8 notice cannot be issued for rent arrears (grounds 8,10 & 11) but can on any other available grounds.
Agents can help landlords to understand what they can and can’t contact tenants about during a Breathing Space, what is expected of the tenant during the period, how long it lasts and what happens after it ends. As well as making sure their own record-keeping is up to scratch, agents will also need to encourage landlords to keep accurate records.
By working with landlords and tenants to recover missed rent payments at the earliest opportunity, letting agencies can aim to correct arrears before a Breathing Space is granted. Therefore it’s more crucial than ever for agents to have the necessary tools and processes in place to manage and reduce rental arrears from the outset of a tenancy. This includes automating rent reminders, keeping digital records of all activity and if necessary, communicating effectively with all stakeholders to agree repayment plans.
It is hoped that the changes introduced will allow those struggling financially to have a limited time in which to seek advice and formulate a plan to move forward. For more information about the scheme, please visit:
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Wayne Beecham
Wayne is East Midland’s answer to property management. His hard work and high standards of service have gained him a fierce reputation within the regional lettings market. He knows what it takes to own and manage a profitable portfolio himself, because he is not only a successful investor and landlord, but co-founder and “hands on” managing director of Progressive Lets.
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