WHAT COULD THE STATUTORY DEBT REPAYMENT PLAN MEAN FOR YOU AS A LANDLORDS AND YOUR TENANTS?
The government wants to introduce a Statutory Debt Repayment Plan (SDRP). There are two consultations in the course of this. The first has closed, and the second closes on 05 August 2022. The SDRP will include a broad range of debts, including debts owed to the UK Government and to creditors outside of financial services. It will also protect debtors from enforcement action, creditor contact, interest, fees, and charges on their debts while they repay them.
What is a “breathing space” under the Debt Respite Scheme?
A breathing space gives people in debt the right to legal protections from their creditors. This means that landlords can’t serve a section 8 notice or start court action against a tenant if they successfully receive a breathing space.
What problem does the Statutory Debt Repayment Plan aim to solve?
The Debt Respite Scheme guidance shares that a breathing space isn’t a payment holiday. The breathing space or mental health space doesn’t mean that a tenant shouldn’t continue to pay what they owe, it simply gives them more time to look into their finances and find a solution to their debt problems.
What is the proposed Statutory Debt Repayment Plan?
The government is currently consulting on the draft regulations for its “Statutory Debt Repayment Plan”, which will focus on “repayment of debt, rather than debt relief,” according to the proposal. This means that an individual’s debts can be combined in a single plan, and “repaid over a manageable time period,” with similar legal protections from creditor action as in breathing space.”
Will tenants be able to access this plan?
It is important to note that rent arrears will be excluded from the repayment plan. The reason for this is that if the tenant does not include their rent arrears in their repayment plan, it may affect their ability to renew the tenancy. This can be avoided by including the rent arrears in the repayment plan, even though they would be prioritised at 30% of each month’s repayments under this scheme.
How can your agency prepare for the impact of the cost of living crisis on the Debt Respite Scheme?
The first part of the Debt Respite Scheme was introduced during the pandemic, although it was planned long before Covid-19 hit. However, Bolwell says that the cost of living crisis may push yet more tenants to require access to this breathing space – and therefore to require a long-term strategy for repaying their debts.
Will landlords have the right to object?
Where arrears of housing costs are included in a plan, the creditor must be given notice of the proposals and will have 14 days to object on specified grounds, including that it is based on inaccurate information or that it prejudices the interests of the creditor. Plans will be reviewed every 12 months or at other times if there is a significant change in circumstances, when a payment break may also be available.