What does the new Debt Respite Scheme mean for Landlords and Tenants?

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium (England and Wales) Regulations 2020 (“the Scheme”) came into force on 4 May 2021. We recently published a series of blogs that set out the purpose of the Scheme, how you can apply for the Scheme, the debts that will qualify and the effect on creditors, which can be found here:

• Debt Recovery: The new Debt Respite Scheme – an outline of what it is, how to qualify for it and how to apply
• The new Debt Respite Scheme – What should I do if I am owed money by a debtor subject to the Scheme?
• Debt Recovery: The new Debt Respite Scheme – What enforcement action is stopped under the Scheme?

But what does the Debt Respite Scheme mean for Landlords and Tenants?

The Scheme will give tenants in rent arrears breathing space to get their finances in order. If granted, the breathing space will afford the tenant temporary legal protection which will prohibit the Landlord from chasing payment of rent arrears and/or taking action to evict the tenant from the property. Landlords  therefore need to have a clear understanding of the impact of the Scheme, in order to minimise wasted costs on prohibited and ineffective action.

How will I know?

Landlords will receive notification, either electronically or by post, if their tenant has been granted breathing space. The notification will confirm when the breathing space will begin, and the duration of the breathing space.

If a Landlord disagrees and is unfairly prejudiced by a period of breathing space, the Landlord can request a review from the debt advisor. The request must be made within 20 days of the breathing space starting, based on the start date in the notification received.

What happens during the breathing space?

Once the breathing space has begun, a Landlord must not:

• Contact their tenant in relation to the rent arrears;
• Charge interest and fees on the rent arrears;
• Serve a Notice seeking possession of the property because of rent arrears ;
• Issue any legal proceedings in relation to the rent arrears; or
• Apply for a bailiff or High Court Enforcement Agent to enforce a possession Order.

How does the Scheme impact evictions?

During a period of breathing space, a Landlord cannot serve a valid Section 8 Notice pursuant to Section 8 of the Housing Act 1988 (the “HA 1988”) upon Grounds 8 (significant rent arrears), 10 (rent arrears), and 11 (persistent late payment of rent) in Schedule 2 to the HA 1988 to terminate an Assured Shorthold Tenancy. Any Section 8 Notice that is served during the breathing space will be invalid, and cannot be relied upon when issuing possession proceedings. Further, a Landlord cannot issue possession proceedings or apply to the Court to enforce a possession Order during a period of breathing space.

Landlords have already been affected by longer notice periods because of the Coronavirus Act 2020 and the eviction ban. The introduction of further restrictions concerning the service of eviction notices will likely have the effect of increasing the frustration of Landlords that are faced with tenants in severe rent arrears, and who are at a financial loss.

However, it is not all doom and gloom for Landlords. The breathing space does not affect a Landlord serving a Section 21 Notice pursuant to Section 21 of the HA 1988, and a Landlord can continue to serve a Section 8 Notice relying on other grounds for possession (i.e. not Grounds 8, 10 and 11). Further, the tenant should continue to pay their rent during the moratorium, as the breathing space applies only to the rent arrears that have already accrued.

How can Ellis Jones help you?

Ellis Jones have a specialised Dispute Resolution  team available to  assist both Landlords and Tenants. If you are a Landlord that would like further understanding of how the Scheme might affect you and the possession action you can take, or you are a tenant faced with a Landlord that is applying pressure on you in respect of rent arrears, we would be happy to discuss your case and see if we are able to assist. Should you wish to discuss this further, please do not hesitate to contact our specialist Dispute Resolution team on 01202 525333 or emma.bowditch@ellisjones.co.uk.

Landlords & Letting Agents Newsletter

At Ellis Jones we have a dedicated team that specialise in landlord and tenant disputes. Our experts have a wealth of knowledge in disputes relating to termination of tenancies, service charge disputes, orders for possession, forfeiture, rent arrears and rent disputes.

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