Call for landlords to be protected in new debt plan scheme

Landlords and letting agents should be protected under the new Statutory Debt Repayment Plans (SDRP) from tenants who may exploit a loophole if they have racked-up rent arrears.

Propertymark says that the proposals for SDRP would see rent arrears being considered as ‘discretionary’ so a rent debt won’t be added to the plan – and that could see a landlord falling into mortgage arrears.

In May 2021, the UK Government introduced a new ‘breathing space’ scheme in England and Wales which gave people in serious debt a 60-day break from creditor action.

Introduction of a Statutory Debt Repayment Plan

Now there is a consultation process underway for the introduction of a Statutory Debt Repayment Plan as the second part of the phase to help people repay debt.

Under the scheme, a certified debt advisor would help develop a repayment plan that would provide reassurances that debts would be paid, in return for legal protections for the debtor.

However, Propertymark says that the government should consider three issues before introducing SDRP. They are:

·        Limit the circumstances where housing debt is covered by SDRPS

Under current proposals, rent debts are considered ‘discretionary’ due to the risks associated with delaying rent payments, such as the landlord not renewing a tenancy agreement. When deciding if rent arrears should be included within the SDRP, Propertymark recommends they should only be included as a last resort, as a landlord could fall into mortgage arrears and be unable to take possession proceedings in respect of arrears included in a plan.

·        Mediation between all parties should be made mandatory

The development of SDRP should be made in conversation with the tenant, agent, landlord and debt advisor. This would ensure the frequency and amount of payment is in the best interests of all parties involved.

·        Ensure the risks of exploitation are minimised

Propertymark is also urging that tenants with a history of rent arrears should be ineligible for the plan. Additionally, they say that all mandatory grounds for repossession under Section 8 should be included as mandatory revocations of the protections provided by the SDRPs. This would reduce instances where landlords face prolonged debt plans with no way of evicting tenants, even if they break their tenancy agreements.

‘Support tenants who temporarily cannot afford to pay off debts including rent’

Timothy Douglas, Propertymark’s head of policy and campaigns, said: “During these difficult times, it is essential that we find ways to support tenants who temporarily cannot afford to pay off debts including rent, while ensuring the solutions cannot be abused by those who have no intention of paying.

“When tenants, landlords and agents communicate effectively to resolve issues, we can prevent unnecessary evictions.”

He added: “The UK Government needs to consider the risks associated with delaying housing debt payments, as this could impact the private rented sector and prevent people on plans to rent property.”

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