The Landlord Law Blog

Interesting posts on residential landlord & tenant law and practice In England & Wales UK

Tessa Shepperson Newsround #179

This post is more than 4 years old

by

Back again in a  week where the news has really been dominated by America and the swearing-in of a new President.  We wish him well.

But what has been going on in the housing area in this country?

A new ‘breathing space’ law

New legislation, the snappily named Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, otherwise known as the Debt Respite Scheme (Breathing Space), is being introduced to give people in financial difficulties time to pay their debts.

There are going to be two types of breathing space:

  1. A standard breathing space, and
  2. A mental health breathing space

The Government Guidance describes them as follows:

  • A standard breathing space is available to any client with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
  • A mental health crisis breathing space is only available to a client who is receiving mental health crisis treatment. If an Approved Mental Health Professional (AMHP) certifies a client is in mental health crisis treatment, the client or someone else might ask you for a mental health crisis breathing space on the client’s behalf. The mental health crisis breathing space has some stronger protections than the standard breathing space. It lasts as long as the client’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).

People will only be eligible for a breathing space if approved and started by a debt advice provider (ie tenants cannot obtain a breathing space on their own), and will only be granted if the debtor is able to pay ongoing debts.

The purpose of the legislation is to give the debtor time to sort things out and try to find a solution without the pressure of demands from creditors.

Note that this legislation is not specifically aimed at tenants but it probably will be used by them, if they qualify.  It will come into force on 4 May 2021.

Six months rule for evictions to remain

Landlords will be relieved to learn that the definition of ‘substantial arrears’ in eviction claims – where bailiffs can evict – will remain a six months and is not going to be amended back to nine months.

However, charities and Labour MPs are concerned that this will now catch some tenants whose arrears have arisen after the pandemic started due to job losses caused by COVID.

Housing minister Christopher Pincher said

The government believes that it is proportionate to widen the rent arrears exemption to the ban on the enforcement of residential evictions to cases where a court is satisfied that a possession order was granted on the grounds of rent arrears and where more than six months of rent is outstanding.

This change is intended to balance the effect of the ongoing restrictions on landlords with the need to continue to protect tenants.

Government guidance can be found here.

A new housing minister

Kelly Tolhurst having resigned as housing minister after just four months for family reasons has been replaced with Walsall North MP Eddie Hughes.

Hughes is highly unusual in that he actually seems to have had some experience in housing and has expressed a desire in the past to be a housing minister.

He has worked in the past in construction and housing, started as a civil engineer and has been a long-term member of the Chartered Institute of Building.

Mind you, building is not the same as the rental market and it is to be hoped that he is not infected with this obsession that Tory MPs seem to have about property-owning being the be all and end all.  The rental market is very important and, unless it is killed by legislation and taxation, is where an increasing number of voters will live.

Call to suspend electrical and licensing inspections during lockdown

All England’s 4.5 million private rented homes in England will need an Electrical Inspection Condition Report (EICR) by 1st April.  However, each report will require hours spent by tradespeople inside a property.  Increasingly electricians are unwilling to risk this, likewise tenants.  However, this is putting landlords at risk of prosecution.

And, despite the pandemic, some Local Authorities are still going ahead with new licensing schemes.

Safeagent and London Property Licensing, along with ARLA Propertymark are calling for a six-month moratorium on approving any new selective licensing schemes, and want councils to impose a six-month pause on making any new additional and/or selective licensing schemes designations.  They are also calling for the Electrical Safety Standards regulations to existing tenancies should be delayed by six months, until 1st October.

Isobel Thomson, Chief Executive, Safeagent said:

Now is not the right time to implement any new licensing schemes or electrical safety regulations.

Not only do they add pressure to much needed resource, they necessitate thousands of extra property inspections, which create too much risk of transmission, even with precautions. We believe there should be a blanket delay of both across England.

This needs to happen response to the latest stage of the outbreak. If the date for evictions can be delayed, surely the implementation date for electrical checks can also be put back?

Snippets

Newsround will be back next week

Notes:

Please check the date of the post - remember, if it is an old post, the law may have changed since it was written.

You should always get independent legal advice before taking any action.

Reader Interactions

Please read our terms of use and comments policy. Comments close after three months

Comments

  1. It lasts as long as the client’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).

    Presumably this could be years? I’m sure most of us who had a Tennant would want to be reasonable and helpful. This seems crazy and open to abuse.

  2. I’d like to take issue with a comment you’ve made about the Debt breathing space in your blog. – quote ;

    ” People will only be eligible for a breathing space if approved and started by a debt advice provider ( i.e. tenants cannot obtain a breathing space on their own), and will only be granted if the debtor is able to pay ongoing debts. )

    The purpose of the legislation is to give the debtor time to sort things out and try to find a solution without the pressure of demands from creditors. ”

    Indeed the latter sentence is entirely correct, but not the former.

    The requirement for a Moratorium application is that the debt be a ‘qualifying ‘ debt. Virtually all rent arrears will be qualifying, unless the tenancy agreement has been obtained by Fraud.

    Section 16 deals with a Debtors obligations ( obligations is not conditional on the application of this legislation, as indeed it refers to something the debtor is obliged to during During the term of the moratorium, not, in order to obtain a moratorium. ) If a debtor was able to pay ongoing debt suddenly because of a moratorium, they would have been able to pay previous debt.

    Nowhere in the legislation does it suggest a tenant should Mandatorily have to do or comply with something for the Breathing space to continue.
    There is provision, Section 18 ( 2 – 3 ) for a Debt advisor to cancel a Breathing space if they feel it unfairly prejudices the interest of a creditor. Lets be blunt, all the moratoriums are going to do that ! – preventing a landlord from serving a Section 8 notice or applying for Possession during the moratorium.

    A debt advisor is going to use the 2 months to come up with either an IVA, DRO or Bankruptcy order.

    With all due respect Tessa, I think your under-playing the significance and dangers of this to landlords.

  3. @Lewis and @Chris – I do not have any personal experience with this legislation and the news item was really just to alert people to the fact that it exists than to give a comprehensive review of it.

    I was told by someone who ought to know about the need for debtors to be able to pay rent as it falls due and I note from the Government Guidance for money advisors that it says in the table in the introduction for standard breathing spaces “They must keep meeting some ongoing liabilities, like paying priority bills.”

    I suppose we shall have to see how they work out in practice.

  4. Chris and Lewis are both correct in what they say. There is nothing in the legislation that says any debt must be paid off, only that ongoing bills must be paid during the moratorium and that the debtor could demonstrate an ability to repay (but not necessarily to actually do so). In the case of the mental health breathing spaces, some treatments will go on for years – potentially decades with chronic anxiety or depression – in which time the creditor is not even allowed to ASK for any debts to be repaid! It’ll be a disaster for landlords in this position and milked for all its worth by the charities and ‘advisers’.

    • Indeed James, but a Debtor could afford to pay just because there’s a 2 month Moratorium ( innocuously termed ‘ Breathing space, – awe, doesn’t just sound so nice and compassionate for the debtor – without taking the Creditors position into account ! )
      Then why couldn’t they have afforded to And made the payments due Prior to the Moratorium.
      This is a 2 month extension to Possession proceedings which ever way you ‘cut the cake’. !

      Part of my point to Tessa is notwithstanding she says she doesn’t have knowledge of the legislation, – by providing a short summary of it in a rather less nonchalant fashion, its not drawing the pitfalls to Landlords attention. Landlords need both the law fully analysed and also a pragmatic understanding of what that means for Landlords, which you obviously have grasped.

Sign up to the Landlord Law mailing list

And get a free eBook

Sign up