How to recover debt from your tenant under new breathing space legislation

Hi, this is Tom Soane and welcome to another episode of the Anonymous Landlord and today we’re talking about the hot topic for all landlords, and all letting agents right now, it’s a new piece of legislation that everybody is calling breathing space and it’s all about tenants that owe you money and how you as a landlord and you’re letting agent can legally and compliantly and I suppose morally as well, chase that debt for you or if you’re doing it yourself, how you can chase that debt and recover that debt and it’s a really big topic right now and look I’ve got to be honest I think it’s going to get bigger.

So if you’re in a position right now where your tenants owe you money, maybe that’s from rent that they haven’t paid or maybe they’ve damaged the property and owe you the money for repairing that damage. If you’re in that situation right now, this is going to help you stay out of trouble and make sure that you can gain possession of the property, recover the debt legally and compliantly but if you’re not in that position right now and your tenant doesn’t owe you any money, then that obviously is a good thing right now but you should still know this stuff just in case your tenant stops paying rent or they do some damage to the property and you need to take action to recover that money. 

Look, tenant circumstances change all the time. If something should happen to your tenant, you need to know how you are legally allowed to recover any money that’s owed to you and this whole breathing space legislation came into force on the 4th of May 2021. 

You must include your breathing space debt scheme paperwork in that application, otherwise, if that’s not included in any application to the court, then the courts are very likely to just reject the claim entirely, then you’ll have to go through the whole process. Again, takes a lot of time and look, the idea for this is that it gives the tenants that are having debt problems a bit of protection from landlords and letting agents chasing that debt and it gives them time and a bit of help to deal with the problem debt, look at their options, get professional and advice from a debt, a professional debt advisory service and the whole breathing space legislation or the actual breathing space or moratorium as it’s called will pause any enforcement action that you can take. 

So landlords and letting agents, you won’t be able to contact the tenant or take any action towards getting that debt back for up to 60 days. You’re also not able to add interest or any charges on that debt for that period of time too and that also includes any debt from before the legislation actually started. 

So, before May the fourth, if your tenant owed you some debt, then you still cannot chase that period within the breathing space-time. 

Now, things to remember, is that it’s not a rent payment holiday for your tenant. Rent is still an ongoing liability. It’s still an ongoing contract. So, yes, you might be in this breathing space period of time, but the tenant still has to either maintain the rent in that time or the debt accumulates to include that rim. 

Now, definitely, definitely, definitely, don’t forget that anybody who’s currently receiving mental health treatment, they are protected with breathing space for as long as their mental health treatment is ongoing and then once that mental health treatment stops, they then get a further 30 days of breathing space. 

So you basically just have to remember that within that breathing space. This period of time, you can’t do anything and if you don’t do anything then you won’t get into difficulty or trouble with it and like I say, this is going to be hit hard. 

So I don’t think anybody should try and bend the rules or try and get away with anything and like I said at the beginning, don’t forget if you’re going to apply to the court for debt recovery or an eviction or anything like that. Definitely, don’t forget to include your breathing space information in that paperwork. 

You can get it online. It’s very easy to find but definitely stick to this, please do. And now I’ve told you about it, there can’t be any excuse. I definitely think this is a good thing. There’s going to be, landlords, whose tenants show them a bit of money and being really difficult, being really terrible tenants where a lot of landlords are going to think. Well, now, I’ve got to give him another 60 days, try and think of it in the broader picture in that there are some landlords and it might not be you, but there are some landlords that are terrible landlords and if the tenant owes them a bit of debt and they’re having mental health issues, then this sort of legislation protects the most vulnerable, but they have to do it as a blanket piece of legislation, don’t they? They have to, they can’t have one rule for one another, all for others. It has to be the same rule across all landlords and tenants. 

So whilst I think this is going to be difficult for some good landlords, or just trying to recover debts. I do think this is a positive move for the quality of life of some tenants. If you’re going to ask me, are there going to be tenants that exploit this? Absolutely yes. 

So what can we do about that? Unfortunately, if the rule is the rule and the law is the law. We just have to follow it and do as we’re told only, Mr. & Mrs. Landlord, right? And I’ve offered, I’ve included a lot more information about this and a load of other legislation in my landlord webinar. 

So, if you do want to join me on the next landlord webinar, where we’ll go through all of the legal updates, changes to legislation, some hints and tips about optimizing your profits, and minimizing expenditures, and tax and accounting and reinvesting and finance, and all of those things where you can either comment below, just here.You can send me a message through Facebook or LinkedIn or you can email me, it’s Tom@pinkstreet.co.uk

So hopefully that helps, don’t forget that this is in force now. So you must allow breathing space for all of your for any tenant that owes you money and don’t forget the whole mental health treatment part of it where you cannot do anything during that entire time that they’re taking mental health treatment. 

So I hope that helps. If you’ve got any questions, just email me or message me or comment below. I’ll do my best to get back to everybody, but I do get a lot of messages. So I just work through them one by one and try and help as many people as I can. That’s my mission and if you want to talk to me about lettings, then do it, book a call in and I’ll speak to you all soon. Take care everyone. Bye bye.