Standard Breathing Spaces – Q&A for Residential Landlords

We previously discussed the introduction of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (“the breathing space Regulations”) which came into force on 4 May 2021 and introduced two types of breathing spaces, standard and mental health breathing spaces.

In this article, I answer some questions which residential landlords may have in relation to the standard breathing space and how it might affect section 8 or section 21 possession claims.

What can I expect to receive if my tenant has applied for the standard breathing space scheme?

Some landlords may find that their tenant has applied for the standard breathing space once they are served with a notice seeking possession or when a possession claim is commenced against them. If a tenant qualifies for a standard breathing space, the Insolvency Service will register their personal details and details of all relevant debts on the breathing space register. This register is currently private and available to creditors (whose debts are included in the breathing space) and authorised debt advisors.

A landlord will receive formal notification from the Insolvency Service confirming that their tenant has joined the breathing space scheme and when the breathing space will start.

What is the relevant debt, are rent arrears included?

Regulation 5 of the breathing space Regulations states that any debt will be classed as a ‘qualifying debt’ except any non-eligible debt. Non-eligible debts are listed under Regulation 5(4) of the breathing space Regulations and you can see what debts are excluded here. However, what is worth noting is that the Government’s guidance ‘Debt Respite Scheme (Breathing Spaces) Guidance for Creditors’ states that rent arrears are treated as qualifying debts for the purposes of the breathing space.

My tenant is in rent arrears, and I have served a notice seeking possession of the property. However, my tenant has informed me that they have joined the breathing scheme, can I speak to my tenant about the rent arrears?

If a landlord has received the formal notification of the tenant’s breathing space scheme, they will not be able to take steps to recover rental arrears which accrued prior to the registration.

In addition, a landlord may not contact the tenant about recovering the arrears until after the moratorium ends, which is 60 days from the date of entry in the register.

Does the breathing space mean that my tenant must stop paying the rent?

While rent arrears which have already accumulated prior to the registration are classified as qualifying debts, the breathing space regulations do not cover ongoing liabilities, such as monthly rental payments after they have registered for the breathing space.

The Government’s guidance, ‘Debt Respite Scheme (Breathing Space) Guidance for Money Advisers’, states that the standard breathing space is not a payment holiday and so, tenants should continue to pay any ongoing liabilities, including making rental payments.

I have already commenced court action to recover possession of the property, but have recently received notification that my tenant has joined the breathing space scheme, can I proceed with the Court claim?

A landlord cannot start any possession proceedings if the tenant has joined the breathing space for the rent arrears.

If a landlord becomes aware that the tenant has joined the scheme and a possession claim (together with the rent arrears) has already commenced, then they or their representative must inform the Court about the moratorium.

Even if a possession order has been granted, the breathing space regulations aim to restrict enforcement activity while the breathing space is in force and so, a landlord cannot therefore seek to enforce the order until after the breathing space comes to an end.

I have already received a possession order. A warrant has been issued and an eviction date has been set. Can my tenant prevent eviction from taking place if they tell me that they have joined the breathing space scheme at the door?

There may be a situation where the tenant informs a landlord or the bailiff that they have entered the breathing space scheme with no prior notice. In that case, an excerpt from a guidance for bailiffs which I have recently seen states that bailiffs should not proceed with the eviction until it is clear whether there is a breathing space moratorium or not.

The guidance also suggests that it will be up for the landlord to provide evidence to of whether  tenant is not in a breathing space.  This is problematic because landlords may however have difficulty proving that the rent arrears are not listed on the breathing space register. This is because the breathing space register is not in the public domain and the landlord will not have anything to show the bailiffs if there is no moratorium.

Breathing spaces are new and complicated and it appears that the bailiffs are going to take a fairly risk averse approach to carrying out their duties. This may involve allowing some time to landlords and tenants to deal establish the position regarding breathing space before carrying out any evictions.

Conclusion

In summary, where a landlord has received formal notification of a tenant’s application to the breathing space scheme, they cannot communicate with the tenant about any rent arrears which accrued pre-registration. However, a landlord can speak to or negotiate with a tenant about any rent arrears which arises after they have applied to the breathing space scheme. If a tenant fails to meet their obligations to pay any ongoing liabilities, including rental payments, a landlord can enforce the newer rent arrears against the tenant.  A debt advisor may also decide to discontinue the tenant’s breathing space.

Interestingly, where an eviction date is set and the tenant informs the landlord about the breathing space in the last minute, the guidance for bailiffs (based on the excerpt I referred to earlier) appears to require a landlord to provide written evidence that the tenant is not in the breathing space before proceeding with the eviction.

Practically speaking, it is quite likely that bailiffs will go ahead and proceed with the eviction unless the tenant is able to provide some sort of documentary evidence of their breathing space. It is interesting to see how this guidance might develop over the next few months as Courts continue to move forward with evictions since the lifting of the eviction ban earlier this year.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*