Home Property Warnings raised over rent loophole in new debt plans

Warnings raised over rent loophole in new debt plans

by LLP Staff Reporter
19th Aug 22 1:03 pm

Under current proposals, rent debts will be considered ‘discretionary’ due to the risks associated with delaying rent payments, such as the landlord not renewing a tenancy agreement.

In response to the consultation, Propertymark says SDRPs are a positive step but they should only help legitimately struggling tenants to pay their rent and prevent the possibility of rogue tenants delaying already lengthy and expensive court procedures.

It is calling for debt advisers to be mandated to only allow rent debts to be included in the plans 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 repayment plan.

Propertymark also wants tenants with a history of rent arrears to be exempt from being eligible for an SDRP, and for mediation between the tenant, agent, landlord and debt advisor to be a requirement when drawing up a plan so the frequency and amount of payment are in the best interests of all parties involved.

Timothy Douglas, Head of Policy and Campaigns for Propertymark, said, “During these difficult times, it is essential 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.

“The UK Government will need to be aware of the risks associated with delaying housing debt payments. This could put landlords at risk of falling into mortgage arrears, which would put them at risk of repossession, potentially causing the tenant to become homeless.

“Our research into the current private rented sector alongside regular meetings with letting agents across the UK has hinted that stock is already at very low levels and many landlords are leaving the sector. Any further legislation that landlords perceive as a risk to their investment will further reduce the availability of homes to rent.”

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