The Debt Respite Scheme (Breathing Space), introduced on 4 May 2021 in England and Wales, offers tenants temporary protection from creditor actions. For letting agents, understanding this scheme is essential in managing tenants who enter the breathing space during a tenancy.
Scottish tenants can apply for the Debt Arrangement Scheme (DAS) for debt-related assistance.
Read on to understand the scheme better and how it impacts a tenancy:
If a tenant is in debt, whether it’s an overdraft, tax, or rent arrears, they can apply for breathing space. This moratorium offers a "period of protection" from creditors.
During this period, tenants are still required to make debt repayments and continue paying their rent. For example, if a tenant is two months in arrears and enters breathing space, they must still pay ongoing rent. It is not a "payment holiday."
While a tenant is in the breathing space scheme, a letting agent or landlord cannot:
If a tenant struggles to pay rent during breathing space, they should speak to their debt advisor for additional support.
The Debt Respite Scheme covers two types of breathing space, which are outlined by the government:
Although creditors can't enforce the debt or charge interest during this time, tenants are still legally required to pay ongoing debts and liabilities, including rent.
A breathing space can be initiated by a debt advice provider authorised by the Financial Conduct Authority (FCA) or a local authority providing debt advice to residents.
The tenant’s letting agent or landlord will be notified if they have entered a breathing space period by receiving either a postal or electronic notification.
This notification will include the date the breathing space starts and relevant details.
During breathing space, landlords and agents are legally restricted from taking enforcement actions to recover rent arrears or other eligible debts. During this period, they cannot:
Letting agents can continue to contact their tenants around topics unrelated to the debt, such as information about maintenance or repairs. They can also respond if their tenants reach out to them directly to discuss their debts.
If court proceedings related to a breathing space debt have already started, letting agents must notify the court. Further action can only be taken with the court’s permission, and Section 8 or 21 notices can't proceed.
Proceedings may resume once the breathing space period ends.
This article is intended as a guide only. For more information, see gov.uk.