New regulations came in to force on Tuesday 4 May 2021, amending the form for Notices Seeking Possession (NSPs) under Section 8 of the Housing Act 1988. This article looks into some of the issues raised by the amended legislation, including its impact on debt breathing spaces.
Notices Seeking Possession
The Assured Tenancies and Agricultural Occupancies (Forms) (Moratorium Debt) (Consequential Amendment) (England) Regulations 2021 (available here) were laid on Friday 30 April 2021 coming into force the next business day which was Tuesday 4 May 2021 (the Monday being the early May Bank Holiday). These Regulations amend their predecessor Regulations from 2015 to amend the prescribed form for Notices Seeking Possession (NSPs) under Section 8 of the Housing Act 1988.
These are the notices social landlords can use to begin the process of seeking possession of assured tenancies in reliance upon the grounds set out in Schedule 2 of the Housing Act 1988.
The new form can be found here (Form 3) and a word version up to date as of the date of writing can be found here.
The timing of the regulations and the date they came into force being so soon after means that notices using the old form sent on either Thursday 29 or Friday 30 April 2021 that would be deemed served on or after Tuesday 4 May 2021 (for example any served on either of those dates by way of Royal Mail first class post) will be invalid as the new form is required from Tuesday 4 May 2021 onwards. A new notice on the new correct form should be served as soon as possible now to try and not lose too much time before the notice can be acted upon by way of issuing proceedings.
The new form is not as easy a read as the previous version and some of the notes within it on notice periods can be confusing. If you have any specific questions about relying on a specific ground and the required notice period please don’t hesitate to get in touch with us.
Breathing Spaces
So why the amendments if they make things more confusing? They incorporate references to debt breathing spaces and moratoriums which were introduced by the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (S.I. 2020/1311) (the Scheme) on 4 May 2021.
In short the Scheme provides a “breathing space”, essentially a moratorium on debt collection and related action, for those owing a debt (debtors), including rent arrears, by those due a debt (creditors).
There are two types of “breathing space”:
- A standard breathing space for debtors who are actively seeking advice from an authorised debt advisor – for 60 days; and
- A mental health breathing space for debtors receiving mental health crisis treatment - for as long as their treatment lasts plus 30 days.
To qualify for a breathing space the debtor must be an individual, owe a qualifying debt that they cannot or will be unlikely to be able to repay all or some of, live in England or Wales, not be subject to some specific debt-related orders currently, not be bankrupt and not have had a standard breathing space in the previous 12 months or be benefitting from a breathing space currently.
Examples of qualifying debts include rent and service charge arrears so landlords should consider these Regulations carefully and plan processes for dealing with breathing space. So far as we can tell from what has bene published so far, there is no exemption or exception for debts owed to social landlords or by tenants of social housing.
Either breathing space can only be started by a debt advisor offering debt counselling (authorised by the Financial Conduct Authority) or a local authority (where they advise their residents on debt) where they deem a breathing space to be appropriate. The debtor’s details will then be added to the new “breathing space register” which will not be available to the public. The breathing space will begin the day after the details are placed on this register and thereafter landlords (or their agents) will be notified and the breathing space must then be respected.
Practical steps to ensure compliance
The most important thing to note is that if you proceed with recovery action during the breathing space then it will likely not be enforceable and you could become liable for the tenant’s costs in relation to it.
We therefore advise using these five “R”s to plan your approach to ensure compliance with the Regulations. As soon as you receive notification of a breathing space for a tenant who owed you a debt take the following steps:
- Record the notification – do this on your customer relations system immediately, detailing which debts it relates to (it may apply to rent only and not repairs recharges for example) and calculate and note how long the breathing space will last for;
- Report the notification – tell anybody working with you or for you in relation to this tenant and their debts – this will include your agents and/or solicitors if they are instructed at this stage. If proceedings have been begun your solicitor should then notify the court and any solicitors acting on behalf of the tenant;
- Review the current position – check what stage of recovery action you are at and STOP all action to recover the debt (whatever stage this action is at) as it must be must be halted or not started during the breathing space;
- Resist contacting the tenant – this is in relation to the debt (and potentially otherwise – please seek specific advice depending on what you wish to contact the tenant about); and
- Request a review - within 20 days of being notified of the breathing space, if you disagree with it and feel you will be unfairly prejudiced by it, request a review by the debt advisor of the decision to begin the breathing space.
In addition, you should not apply any interest or late payment fees to the breathing space debts owed to you by the tenant during the breathing space.
You can access guidance on the Scheme here but for further details but if you have any questions about specific situations, or in general, please don’t hesitate to contact Zoe Glacken.
