Following our blog post back in February, the Government Debt Respite scheme, or ‘Breathing Space’, has now come into force. This new prescribed Section 8 notice will offer greater legal protection, benefitting an estimated 700,000 individuals in the first year.
The two separate ‘breathing spaces’ are standard, and mental health crisis. Standard is available to give legal protection from creditor action for 60 days to those struggling with debt. Mental health crisis is available for the duration of relevant treatment, plus 30 days.
Protections include pausing enforcement action and contact from creditors, and freezing interest and charges. This is in line with the recent introduction of less threatening debt letters, a pilot of no interest loans, and record levels of debt advice. Eligibility for the scheme will be assessed by a professional debt advisor to ascertain whether a breathing space is the most appropriate option. In mental health crisis cases, a mental health professional must certify that a person is receiving treatment.
John Glen, Economic Secretary to the Treasury, said:
“We’re determined to tackle problem debt, but it is incredibly hard to get your finances back on track when your debts are piling up and you’ve got creditors at the door.
“This scheme will give people a breathing space from charges, distressing letters and bailiff visits, so they can tackle their problem debt with support from a professional debt advisor.
“And to help people going through a mental health crisis, which is too often linked to financial problems, we’re bringing in stronger protections lasting beyond the end of their crisis treatment.”
The scheme, although directed principally at large lenders such as banks, relates to any creditor – including landlords. The Insolvency Service will notify landlords if a tenant has entered into the scheme. They should not then be issued an eviction notice or possession order, or be approached to ask for payment of the debt. Mediation can continue during the process with a third party, and non-debt-related liaisons, such as inspections, should still be supported and discussed between parties. We continue to recommend that landlords have a rent guarantee policy in place.
The relevant form will soon be available on the Government’s website, detailing the correct information on notice periods, and including reference to Breathing Space regulations. Instead of following notice periods on the form, landlords should use the temporary coronavirus periods until restrictions end. These are noted below:
Anti-social behaviour
7a – at least 1 calendar month, regardless of other grounds.
14 – landlord may apply to court once notice is served (usually the next working day). If using, ground 7a takes precedence.
Rent arrears
8, 10, 11 – 4 weeks, when arrears are more than 6 months at date of service, and no other grounds are being relied upon, or;
6 months, when arrears are less than 6 months at date of service.
Other
1-6, 9, 12, 13, 15, 16 – minimum 6 months. This takes presence over all shorter notices periods, except anti-social behaviour (above).
7, 7b – 3 months, when cited on their own.
17, 14za – 2 weeks, when cited on their own.
For all guidelines, please visit the Government website here.
If you are a tenant struggling financially, or a landlord concerned about your situation, please get in touch with Orchards on 01525 40 22 66 or email ampthill@orchards.co.uk.