Government urged to protect letting agents against rent loophole in new debt plans

New Statutory Debt Repayment Plans (SDRP) must include protections for letting agents and their landlords so they are not exploited by tenants in rent arrears, according to Propertymark.

The UK government has been consulting on the introduction of SDRPs that will allow for a certified debt advisor to develop a repayment plan that provide reassurances that debts would be paid, in return for legal protections for the debtor.

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 to prevent the possibility for rogue tenants to delay 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 is in the best interests of all parties involved.

Timothy Douglas, head of policy and campaigns for Propertymark, commented: “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 highted 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.”

SOURCE: Property Industry Eye | AUGUST 19, 2022 | MARC DA SILVA