Landlords urged to check breathing space initiative

Landlords are being urged to check the arrears process due to the launch of the Government’s breathing space initiative. Arrears documents submitted without referencing the initiative risk being rejected.;
Breathing space

Landlords are being urged to check the arrears process due to the launch of the Government’s breathing space initiative.

Breathing space

The initiative - formally called the Breathing Space Moratorium and Mental Health Crisis Moratorium Regulations 2020 - pauses enforcement action on individuals from creditors including letting agents and landlords. It freezes charges, fees and certain interest on qualifying debts for up to 60 days.

This means that documentation used to gain possession must include details of the scheme, or risk the eviction being rejected.

Mark Hayward, Propertymark’s policy adviser commented:

“The changes introduced are to allow those struggling financially to have a limited time in which to seek advice and formulate a plan to move forward.  The scheme will have a large impact on the current processes followed by agents and landlords when taking action against rent arrears, and it is now hugely important that those dealing with rent debt are aware of the new scheme and the changes in working it will bring.”

Government guidelines

Elsewhere in the news, John Glen, Economic Secretary to the Treasury, says:

“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 aims to provide the individual with a professional debt advisor, who can help them manage all aspects of their finances, not just rent arrears.

Whilst beneficial to tenants in need, and ultimately a good way to ensure that rent is eventually paid, this change could prove difficult to navigate for some landlords.

Estate agent co-operation

Given that the legislation may be confusing for landlords who are looking to evict their tenants, PayProp’s chief sales office Neil Cobbold has commented saying estate agents should help their landlords to understand the process.

“Agents can help landlords to understand what they can and can’t contact tenants about during a Breathing Space, what is expected of the tenant during the period, how long it lasts and what happens after it ends. As well as making sure their own record-keeping is up to scratch, agents will also need to encourage landlords to keep accurate records.”

He also cautioned estate agents on putting in place measures to mitigate the risk of rent arrears, from the beginning of every tenancy agreement:

“When letting agents and landlords are unable to chase unpaid rent for a prolonged period, it has serious consequences for their cashflow. With another barrier to recovering missed payments now in place, it’s more crucial than ever for agents to have the necessary tools and processes to manage and reduce rent arrears from the outset of a tenancy.”

Overall, whilst providing a buffer to some tenants who are in crisis and need advice and guidance, there are concerns that this breathing space legislation will provide a massive hurdle to legitimate landlords who are already struggling with eviction bans and court pile ups.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.