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Impact of the New Debt Respite Scheme on Landlords

The government has introduced a new Debt Respite Scheme, to be launched on 4 May 2021. We thought it was important to share the details of this scheme so that you understand the implications for you as a landlord.

What is the Debt Respite Scheme?

The Debt Respite Scheme is designed for individuals, not businesses. It allows individuals that have incurred debt over the past year to have some 'breathing space' to give them time to plan how they will pay their debts.

There are two types of schemes available, and they both operate in the same way. The schemes are:

  • a standard breathing space and
  • a mental health crisis breathing space

A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days.

A mental health crisis breathing space is only available to someone receiving mental health crisis treatment, and it has some stronger protections. It lasts as long as the person's mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts). However, it is essential to note that this only applies to people admitted to the hospital or receiving outpatient treatment for mental health issues.

Who can apply for the Debt Respite Scheme?

As a landlord, you need to understand how this scheme works as your tenants may apply for the scheme.  The Scheme applies to ‘individuals’ that are living or usually reside in the UK and includes those with tenancy arrears.

To apply for the scheme, the tenants must contact either their local authority (if they offer debt advice) or a specialist debt advisor. They can grant them 'breathing space', and you would be informed by email or by post. Advice must be given by a qualified person and cannot be charged for (which questions now many will actually materialise given the advisor will have to work for free).  

Once you are notified, you must not contact your tenant directly during this period. You cannot take any enforcement action against tenants for rent arrears. This means you won't be able to serve Section 8 notices or take possession of the property.

If you need to contact your tenant about other issues such as repair or maintenance, that's fine. Also, if the tenant contacts you directly, you can respond.

It's important to note that this is not a payment holiday; the expectation is that the tenant will pay the rent arrears at the end of the scheme. The challenge for landlords is that they need to continue to pay the mortgage for the property.

In the long-term, it is hoped that by tenants having this opportunity to review their finances and create a plan to re-pay all rent arrears, this should be a good solution for both the tenant and the landlord.

If you are a landlord and want to find out more about how this scheme works, please contact our team. You can email us at enquiries@kingswoodrim.co.uk, or you can call us at one of our offices. Nottingham: 0115 704 3163 or Mansfield 01623 277 115.



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