The above Regulations came into force on 4 May 2021

and apply to most debts accrued before or after that date, including rent arrears, service charge arrears and any amount payable under an order or warrant for possession of a debtor’s residence or business.

Landlords will therefore need to give consideration to the Regulations before initiating any proceedings to recover rent arrears from individuals.

The Regulations allow any person who is in debt to seek a debt moratorium from an approved debt advice provider. To qualify for a moratorium a debtor must satisfy the provider not only that they will be able to pay their debts in full if they are given the breathing space that the moratorium creates, but also that they will not get into any further debt during the moratorium. The tenant (and any other debtor) must therefore be able to actually clear its debts. A moratorium does not therefore allow tenants (or other debtors) to avoid their liabilities indefinitely.

A  breathing space moratorium can be granted for up to 60 days. If a moratorium is granted, it will be registered on a central government database.

If a tenant is granted a moratorium, a landlord will not be able to contact them to seek payment of any arrears, whether in part or in full, or any interest on any arrears. A moratorium will also prevent a landlord from issuing a section 8 notice on the grounds of arrears, from issuing possession proceedings following service of a section 8 notice and from enforcing possession orders. Any interest and penalties accrued on arrears during a moratorium cannot subsequently be claimed.

The silver lining for landlords is that section 21 notices can still be issued during a moratorium and possession proceeding brought in respect of the same in the event the tenant does not vacate at the end of the notice period. Section 8 notices can also still be issued on any grounds other than rent arrears.

Tenants must also continue to pay their rent for their main home. A failure to do so by the tenant entitles the landlord to apply to the relevant debt advice provider for the cancellation of the moratorium. If the debt provider refuses to do so, the landlord can apply to the Court for the moratorium to be brought to an end or to allow the eviction process to progress.

Moratoriums will also be available to people suffering a mental health crisis so that they are protected from action being brought against them for debts on a temporary basis while their mental health issues are resolved. A mental health crisis moratorium can be granted for the length of the mental health treatment being provided plus an additional 30 days. For such a moratorium to be granted, the mental health crisis has to be confirmed by a mental health professional.

As we slowly begin to emerge from the Covid-19 lockdown and restrictions, it is likely that there will be many tenants seeking debt moratoriums while they try to get themselves financially back on track. Landlords will have to be patient and wait out the moratorium before taking any action to recover rent arrears. Alternatively, they should act quickly and where possible issue section 8 and / or section 21 notices to try and remove a tenant before any moratorium is granted.

Should you require any advice about debt moratoriums, please contact either Hayden Glynn, Consultant, Claire Moss, Senior Associate or Natasha Wright, Solicitor on 0113 280 2000 or via hayden.glynn@luptonfawcett.law claire.moss@luptonfacett.law or natasha.wright@luptonfawcett.law

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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