Debt Respite Scheme (Breathing Space): What Does This Mean For Landlords and Tenants?
Posted:16th January 2023
The Debt Respite Scheme, otherwise known as “Breathing Space” allows someone facing problem debt to seek temporary legally protection against creditors such as mortgage lenders, loan companies, and landlords in respect of certain debts.
If breathing space is granted, creditors must pause any action related to the debt until this respite period is over.
There are two types of debt respite schemes:
- Standard breathing space: This allows those with problem debt the opportunity to have 60 days of breathing space or legal protection from creditors. This means putting enforcement action on hold.
- Mental health crisis breathing space: This is available to people receiving mental health crisis treatment. The legal protection lasts as long as the crisis treatment, as well as 30 days.
For tenants granted breathing space, this means their landlords are unable to take action for debts owed such as unpaid rent or bills. The length of time a tenant’s breathing space lasts depends on which scheme they are under.
How to apply for Breathing Space
The Debt Respite Scheme can only be initiated by a Debt Adviser or, an Approved Mental Health Professional if they are applying for mental health crisis treatment.
An application can be made by people who live in England and Wales who owe a “qualifying debt” to a creditor. To be eligible, applicants must not have had a standard breathing space period in the last 12 months or have a debt relief order (DRO), an individual voluntary arrangement, or an interim order.
What does this mean for landlords and tenants?
If a tenant is granted respite, a landlord cannot pursue rent arrears or charge interest on existing rent arrears. Landlords cannot serve a notice seeking possession of the property on the tenant or take any steps to enforce a possession order already made.
Respite also extends to utility, council tax, and fuel arrears. There is no limit on the amount of debt covered by the respite period, though there are some debts which cannot be included such as student loans and some other personal debts.
If there are any ongoing possession proceedings at court and a landlord tries to take action that is not in line with the breathing space rules, it will be void. This includes trying to evict a tenant, as the moratorium protects tenants from eviction during the breathing space period.
After the respite period ends, a tenant must pay the debts owed to the landlord and possession proceedings can continue.
This scheme allows tenants with problem debt to be given a period of time to gain the advice and support that they need.
The Breathing Space scheme can place landlords in a difficult situation when they are owed rent, council tax, etc if their tenant is under the Respite Scheme as it will have financial implications for them as they may not be able to take immediate action to recover money due to them.