Landlords, letting agents and enforcement agents need to be aware of the
new Debt Respite Scheme (Breathing Space) Regulations in England and Wales.
From the 04 May 2021, if your tenant is in a ‘breathing
space moratorium’ you will be prevented from chasing your tenant (and
anyone who is jointly liable) for rent arrears, charging late interest, and
fees, and taking any enforcement action for rent arrears caught by the
moratorium. Any action taken by the landlord or letting agent will be null
and void if it is in breach of the regulations.
A breathing space provides a tenant in problem debt, a chance to address
their debt through a debt adviser (regulated by the Financial Conduct
Authority) or the tenants’ local authority. The hope is that the space will
give the tenant a chance to get control over their financial situation and
repay their debts. Landlords will be notified by the debt adviser if their
tenant is in a breathing space. Landlords should check that the debt
adviser is aware of all the debts owed to the landlord by the debtor.
There are two types of breathing space: 1) A ‘standard breathing space’
which lasts for 60 days; and 2) A ‘mental health crisis breathing space’
which lasts for as long as the tenant is receiving treatment for their
mental health plus 30 days after the treatment has ended.
Whilst in a breathing space, the tenant does not have to repay their debts,
but residential landlords can expect that the ongoing rent, tax and
utilities continue to be paid otherwise the tenant may be taken out of the
breathing space. Tenants in a mental health crisis breathing space are not
required to pay their ongoing liabilities.
Landlords, letting agents and enforcement agents cannot take any action
relating to the rent arrears protected by the moratorium or even contact
the tenant about it during a breathing space. Contact can still be made
with the tenant about other matters such as repairs and maintenance.
This means a landlord or letting agent cannot serve a Section 8 notice on
the grounds of rent arrears or take possession having served such a notice.
If court proceedings have got underway and the tenant is then placed in a
breathing space, landlords must notify the courts as soon as possible.
Landlords must also inform any instructed agents to stop enforcement action
otherwise they may be liable for any losses the debtor or the agent have as
A Section 21 notice or a Section 8 notice on other grounds can still be
served on a tenant in a breathing space.
Landlords can also pursue any guarantors to the lease (if applicable).
A breathing space moratorium can be challenged under the regulations but
there are strict timeframes and requirements which must be followed.
Landlords and letting agents will need to ensure that any automated systems
they have in place to chase for payment of the arrears will not apply to a
tenant in a breathing space. Any automated bills or invoices will also need
to be amended so that any rent arrears, interest and fees relating to the
breathing space debt are not included in any rent demands which are sent to
the tenant during a breathing space.
It is important that landlords and letting agents comply with the
regulations or they will face complaints being made directly to them or
directly to the Insolvency Service who can pass the complaint on to the
relevant industry body. While letting agents in England are not currently
regulated, this could be a risk to Welsh agents as they are required to be
licenced by Rent Smart.
These regulations will also affect commercial landlords and letting agents
if the tenant is an individual, not registered for VAT and the debts do not
relate solely to the business. This may be the case if you have an
individual tenant who is the director of a company which operates from the
rented premises. The tenant is unlikely to be personally registered for VAT
and some of the debt may be personal.
More information can be found in The Debt Respite Scheme (Breathing Space
Moratorium and Mental Health Crisis Moratorium) (England and Wales)
Regulations 2020 which can be found
and the detailed government guidance which can be found
. Landlords and letting agents should review the regulations and guidance
The guidance notes on section 8 notices and the guidance notes on
possession proceedings have been updated in light of these regulations.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific