What is the new Debt Respite Scheme for Landlords?

If you have downloaded our most recent Rental Market Newsletter, you probably know a bit about the new Debt Respite Scheme, Breathing Space. You can download the February newsletter here.

This article is an overview of the frequently asked questions of the scheme provided by Propertymark. For further information, please visit the links at the end of this page.

The Debt Respite Scheme has been set up in England and Wales to provide a temporary period of respite from creditor (landlord) action to help people in problem debt (tenant) consider their options. It will pause most enforcement action, creditor contact, and interest and charges on a persons qualifying debts. Although it doesn't come into force until 4th May, qualifying debts can include any that the debtor had before the legislation starts.

It's important to note that A Breathing Space is not a payment holiday and certain debts are considered ‘ongoing liabilities’. Examples of these can be found here.

There are two types of moratorium

  1. A Breathing Space moratorium - protections for people in problem debt by pausing enforcement action from creditors and freezing charges, fees, and certain interest on qualifying debts for up to 60 days.
  2. A mental health crisis moratorium - stronger protections and lasts as long as a person’s mental health crisis treatment, plus 30 days.

A Breathing Space moratorium can only be accessed once every 12 months, but there is no limit to the number of times that an individual can enter a mental health crisis moratorium.

Most debts are likely to be qualifying debts and these include credit cards, overdrafts, utility bills, mortgage, or rent arrears.

A Breathing Space can only be started by a debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling or local authority (where they provide debt advice to residents).

Any person who is in debt can seek a moratorium from an approved debt advice provider. For instance, when creditors are notified about a moratorium, they must pause enforcement action and freeze charges, fees, and certain interest for the duration of the moratorium.

Creditors must also conduct a reasonable search of their records for any additional debt(s) owed to them by the debtor, as they may be eligible to be added to the moratorium.

Further information:

Debt Respite Scheme Regulations 2020 https://www.legislation.gov.uk... Debt Respite Scheme (Breathing Space) guidance https://www.gov.uk/government/... Moratorium – Scotland https://www.aib.gov.uk/debt/de...

Dawn Clarke

Lettings Director

[email protected]

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