Loopholes In New Statutory Debt Repayment Plans Need Revising To Benefit Tenants, Property Investors and Landlords

The UK government will be introducing a new set of Statutory Debt Repayment Plans (SDRP). These are currently under review and Propertymark, the UK's leading professional body for estate agents has been invited to consult. 

The SDRPs were written with two goals in mind: allowing certified debt advisors to develop repayment plans that provide solid reassurances of debt fulfilment while providing legal protection for debtors. 

While the intent of SDRPs are a good start for debt fulfilment, Propertymark has observed that some sections are structured in a way that may be open to abuse by debtors or tenants with rent arrears and possibly detrimental to landlords and property investors, in return). 

These “loopholes” seem leaning more towards the tenants’ benefit rather than a proper balance between tenants and landlords. 

In its current form, the SDRPs have language where rent debts are considered “discretionary”. This may refer to the possibility that once tenants under SDRPs have fulfilled the debt, landlords may no longer renew a tenant agreement with them. 

Propertymark also recommends that SDRPs should only be for legitimately struggling tenants to pay their rent.

The government should define which debtors or tenants with rent arrears may apply and created clearly and carefully so that rogue tenants and tenants with history of rent arrears may be made ineligible and (not take advantage of the SDRPs).

The government should also add another layer: mediation. Propertymark recommends adding a mediation between the tenant, agent, landlord and debt advisor as a requirement to drawing up a Statutory Debt Repayment Plan so that the schedule and debt amount is agreeable to everyone involved.

Another concern: delayed rent payments can negatively affect landlords and property investors who may find themselves potentially falling into mortgage arrears if their tenants, so debt advisors should be given the responsibility to include rent debts only as a last resort (especially if SDRPs define rent debt is as “discretionary”).

“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.” states Timothy Douglas, Propertymark’s Head of Policy and Campaigns. 

“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… Any further legislation that landlords perceive as a risk to their investment will further reduce the availability of homes to rent.”

The SDRPs are a good idea and they are a great start for letting agents, landlords and property investors to recoup rent payments, but these “loopholes” need to be fixed to protect not only the rights of tenants but also of the letting agents, landlords and property investors.