New ‘Breathing Space’ scheme launched that could help people manage mortgage and rent debt

Toby Weiss

Toby Weiss

Content Marketing Manager at Reapit

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Breathing Space scheme launched-min

The government has today (4 May) launched a new scheme that is intended to help an estimate 700,000 people struggling with debt problems.

Breathing Space will offer people facing financial challenges space to receive debt advice or mental health crisis treatment, without pressure from creditors or mounting debts.

The scheme will give people legal protection from their creditors for 60 days, freezing most interest and penalty charges. Enforcement action will also be halted. Participants of the scheme will also receive professional debt advice including a plan to help them get their finances back on track.

Most debts will qualify for a breathing space, including credit and store cards; personal and payday loans; overdrafts; utility bills, rent and mortgages arrears; and government debts like tax and benefits.

No enforcement action can take place against a debtor or anyone who is jointly liable with them for a Breathing Space debt once a Breathing Space has started.

Impact for lettings agents and landlords

The Breathing Space initiative (formally known Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, freezes enforcement actions from creditors, including lettings agents.

For landlords pursuing evictions and possession due to rent arrears, if a tenant has successfully applied for a Breathing Space which includes rent arrears in their application, then the landlord will be notified by the Insolvency Service. Under these circumstances:

  • Landlords and agents must put on hold any action they are taking in relation to the rent arrears (including court action) for as long as the Breathing Space lasts.
  • A Section 8 notice cannot be issued for rent arrears (grounds 8,10 & 11) but can on any other available grounds.

ARLA Propertymark also raised that any Section 8 notices issued and served on a tenant from 4 May must now include details of the Breathing Space scheme, and Section 8 notices issued with an out-of-date form will be invalid. 

Mark Hayward, Propertymark Chief Policy Adviser, said:

“The changes introduced are to allow those struggling financially to have a limited time in which to seek advice and formulate a plan to move forward. The scheme will have a large impact on the current processes followed by agents and landlords when taking action against rent arrears, and it is now hugely important that those dealing with rent debt are aware of the new scheme and the changes in working it will bring.”

Resources

Press Release: New scheme to give people in problem debt breathing space launched
Guidance: Debt Respite Scheme (Breathing Space)

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