From 4th May 2021, the government is launching its new Debt Respite Scheme (Breathing Space) Regulations in England and Wales.
The new legislation is designed to give ‘breathing space’ to individuals facing financial difficulties, enabling them to receive debt advice or treatment for mental health issues.
As from 4th May 2021, those struggling with debt will be given legal protection from creditor action for up to 60 days. This ‘breathing space’ can be instigated once every 12 months by an FAC-authorised debt advisor or by a local authority.
During this period, landlords and letting agents will be blocked from taking enforcement action or charging late fees or interest on rent arrears.
Mental health issues
‘Breathing space’ can also be accessed during a mental health crisis. Individuals will be protected from interest and charges for the length of time they are receiving treatment, plus 30 days. Debt protection measures are stronger for those facing mental health difficulties and there are no limits as to how many times such a ‘breathing space’ can be triggered.
During this period, landlords and letting agents cannot contact tenant regarding their debt,
How does a ‘breathing space’ work?
During ‘breathing spaces’, creditors can only contact a tenant or joint tenant as follows:
- To discuss unrelated matters, such as ongoing liabilities or a debt that is not covered by the legislation. A tenant must be meet any ongoing liabilities and can only claim a ‘breathing space’ for the arrears that may have accrued. Rent must continue to be paid during their ‘breathing space’ or their entitlement may be cancelled.
- If the debtor asks for information about a breathing space, debt or a debt solution.
- To respond to a query or complaint the debtor sent you.
- To inform the debtor about any action or legal proceedings allowed by a court or tribunal.
- If required to do so under the Consumer Credit Act 1974 or by the FCA Handbook.
Should there be an on-going legal proceeding, a creditor must tell the court or tribunal in writing as soon as they have been notified that a tenant has been granted ‘breathing space’.
Are there penalties for non-compliance?
Landlords and lettings agents may face penalties for non-compliance of the rules, including a warning from a debt advisor. If there is a persistent flouting of the rules, the Insolvency Service may be involved and they may pass the complaint onto an oversight or industry body, or alternatively an ombudsman such as The Property Ombudsman or The Property Redress Scheme. In extreme circumstances, the ombudsman could ban an agent from legally transacting as a letting agent.
If you’re looking for advice and support on ‘breathing spaces’, please contact our Lettings team on 0113 264 2642 or email firstname.lastname@example.org.Back to Blog