Breathing space - a guide for landlords
As a landlord; What the new regulations means to us -
A new Debt Respite Scheme has been set out by government which is known as Breathing Space. This will come into effect as from the 4th May 2021. Breathing space is something that would be given to tenants who fall into the “problem debt” category. Ultimate protection can be given to tenants for any outstanding debts from their letting agent, therefore, this is something landlords might need to consider when predicting future cashflow forecasts.
Types:
There are two types of breathing space schemes presented by the Government. The first one is a standard breathing space and second is a mental health crisis breathing space.
1) Standard breathing space: there will be an enforcement action from creditors halted for almost sixty days. All interest would be frozen for those with debt problem.
Individuals will receive professional debt advice during this period of sixty (60) days and help them with a long-term solution. Standard breathing space can only be accessed by individuals via an approved debt advisor which is supposed to be registered with the financial conduct authority or local authority. This can only be claimed once a year.
2) Mental health crisis breathing space:
Those individuals who would be receiving treatment related to mental health issues would also be rewarded with the same protection until the treatment has been completed.
This is expected to help over 700,000 people across the UK to receive professional help in the first year of the scheme as reported by the government. Individuals must be certified being in a mental health crisis treatment in the case of a mental health issue. There is no limit on how many times this can be claimed.
What this means for landlords:
If you are told that any debt owned to you is in breathing space you must stop all actions relating to the debt. You will be informed by an electronic service notification that will inform you about each debt that is in breathing space, the whole process is monitored electronically. If you receive a notification related to breathing space, then you need to ensure that you apply the protection measure as outlined in the guidance.
Protection measures:
You will need to identify the debt owned by the sender as soon as possible in case you receive a notification of breathing space. You can also report this back to the appointed debt advisor as well.
Make sure that you have stopped any interest payments on the debt and additional fees, charges and penalties during the period of the breathing space.
Do not allow for additional credit over £500.00 to be taken out.
Payment holiday should not be mistaken with the breathing space. Whilst you can not enforce a breathing space debt during the time period of breathing space, you can continue to accept any payment made from the debtor of their own free will.
The day after a debt advisor / court cancel it or from the day it started a standard breathing space will end in sixty (60) days.
For additional government published information:
Or contact us at:
https://www.mestatesltd.co.uk/contact