Tenants have been warned they need to continue paying rent and bills while taking part in the new Breathing Space scheme – or their debt advisor can cancel it.
Although interest and fees are frozen, the government says it’s not a payment holiday and that anyone entering a Breathing Space has to keep up payments while they work to find a debt solution and access professional advice.
Housing law experts have also warned that the scheme isn’t a free ride for defaulting tenants, who have 60 days to get their finances back on track. Most debts will qualify, including rent arrears and Universal Credit overpayments.
If a tenant has successfully applied to the scheme, landlords have to put any action they’re taking in relation to the rent arrears (including court action) on hold for as long as the Breathing Space lasts.
A Section 8 notice can’t be issued for rent arrears but can on any other available grounds. In a late move last week, the government announced that both landlords, agents and their solicitors will now have to include details of the scheme within paperwork when seeking to gain possession of a property, or risk the eviction being rejected.
The Insolvency Service has also issued new guidance explaining that rent arrears on joint tenancies can be included in a Breathing Space, even if only one of the tenants goes into the scheme.
The joint debt would become a Breathing Space debt, and the protection from enforcement action would apply to both parties. Creditors could still charge the other person interest or fees and the Breathing Space wouldn’t affect the other person’s debts and liabilities in their own name.
The scheme is set to help about 700,000 people this year who are struggling with problem debt.