Breathing Space, officially called the Debt Respite Scheme, is a government scheme which could help relieve some of the pressure and stress caused by being in debt. Operating in England and wales a qualifying debtor can apply for up to 60 days ‘breathing space’ from debt, which can include rent arrears.
It is important for landlords to be aware of the scheme and what it would mean for them if a tenant who is in rent arrears in granted a Breathing Space. You can see the full guidance for creditors here but here are some of the keys points:
- 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 a local authority (where they provide debt advice to residents)
- Debts included in a breathing space must be qualifying debts and can include rent arrears, other types of debt include credit cards, store cards, personal loans, pay day loans, overdrafts, utility bill arrears.
- As a creditor, if you’re told that a debt owed to you is in a breathing space, you must stop all action related to that debt and apply the protections. These protections must stay in place until the breathing space ends. You must make sure you stop any enforcement* or recovery action to recover that debt, by you or any agent you’ve appointed. *Enforcement action is can include serving a notice to take possession of a property let to the debtor on the grounds of rent arrears due up to the start of the breathing space; or take possession of a property let to the debtor having served such a notice prior to the start of the breathing space
- It is important to note that A breathing space is not a payment holiday. While you cannot enforce a breathing space debt during a breathing space or charge interest or fees on it, a debtor is still legally required to pay their debts and liabilities. During the Breathing Space, the debtor should continue to pay any debts and liabilities they owe you. You can continue to accept these payments, including those you get from existing direct debits.
- Your tenant must also tell the Department for Work and Pensions (DWP) if they’re making deductions from benefits (not including Universal Credit) in respect of their debt. Existing deductions from Universal Credit are not included in breathing space.
- Generally, during a breathing space, you (or any agents you have instructed) must not contact a debtor about any collection or enforcement action for a breathing space debt. This includes asking them to pay or starting or continuing any legal action