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Breathing Space: what is it and how does it affect my ability to recover a debt? Will it apply to rental arrears owed by a Tenant?

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What is ‘Breathing Space’?

Breathing Space is a newly established Debt Respite Scheme, that  will give an individual who is in debt the right to legal protections from being chased by creditors. The scheme applies to the rental sector and therefore protects tenants from being chased by Landlords or letting agents for rent arrears.

As the name suggests, Breathing Space  provides a window in which individuals can find an effective and long term solution for dealing with their debts.

There are two types of Breathing Space:

  • Standard Breathing Space
  • Mental Health Breathing Space

When did it come in?

The Breathing Space Scheme was introduced on 4 May 2021, largely as a response to the economic impact of the Coronavirus pandemic.

When will it apply?

A debtor (including a tenant in arrears) can ask for Standard Breathing Space through Debt Advisers.

For Mental Health Breathing Space, a debtor needs to apply through an Approved Mental Health Practitioner (AMHP).

How long will Breathing Space last?

Standard Breathing Space lasts for up to 60 days, with a review between days 25 and 35. The debtor can only have one Breathing Space per year.

If Mental Health Breathing Space is in operation, it  will last for as long as crisis treatment lasts, plus 30 days. There is no limit on the number of Mental Health Breathing Spaces a Debtor can have in a year.

When will it apply?

A debtor wanting to use the scheme has to contact a Debt Adviser, and satisfy eligibility criteria. Not all debts will qualify for Breathing Space.

If a debtor is eligible, however, once an application has been completed, the Insolvency Service will notify Creditors and Landlords that the individual is subject to Breathing Space, and what this means for them.

How will this affect me, as a creditor?

You will be contacted by the Insolvency Service and notified that an individual who is indebted to you is subject to Breathing Space, and told when the Breathing Space period started.  You must then stop all action related to that debt and ensure that you do not breach the protections that will apply until the end of the Breathing Space period.  

Protections will apply from the date that a creditor is notified that a debtor is in Breathing Space. An electronic notification is effective the day it was sent to the creditor. Postal notifications are effective 4 working days after being posted.

I’m a Landlord – how will it affect me?

With effect from 4 May 2021, as a Landlord you must include details of the ‘Breathing Space’ Debt Respite Scheme if you issue a Section 8 Notice. This is designed to shield tenants from further interest and charges.

As soon as a Landlord is notified that their tenant is in Breathing Space, they must immediately pause enforcement action and freeze charges, fees and interest for a period. This means Landlords must put on hold any action being taken in relation to rent arrears (including court action) for as long as the Breathing Space period applies.

It is important to note that Breathing Space can apply to former tenants, and so could relate to judgments for damage to a property, or other unpaid bills, even if the debtor is no longer living in the property.

What can’t I do once I am notified that a tenant/debt is in Breathing Space?

Once notified a Landlord, or their agent, must not do any of the following until the end of the Breathing Space period: 

  • Contact the tenant directly in relation to the debt
  • Obtain a warrant in relation to the debt
  • Serve a notice seeking possession because of the debt
  • Sell on the debt to a third party
  • Charge interest on the debt for the duration of the breathing space period
  • Apply for a judgement in relation to the debt
  • Enforce an existing money judgement for the debt
  • Take control of the tenant’s belongings
  • Request third party deductions from Universal Credit or other benefits
  • Start bankruptcy proceedings

Landlords may continue to contact their tenant about anything not related to the debt. For example, they can still contact their tenant to arrange repairs or inspections for electrical or gas safety checks.

If you are a Landlord/Creditor wanting specialist advice on the Breathing Space Scheme and how it affects a debt owed to you, including rental arrears, the Dispute Resolution team at Johnson Astills can help you.

Contact us today to arrange a Fixed Fee Initial Consultation with Laura Anderson, to receive pragmatic, expert advice.