Breathing Space scheme: relief for farm tenants

Ashtons’ Alice Trainor gives an insight into the new Debt Respite scheme.

In the past we have helped a number of farmers and landowners diversify and let out sections of their buildings to non-agricultural commercial tenants. This proves a great source of income as long as the rents keep rolling in! It’s equally great as long as the income from this type of non-farming source doesn’t exceed their farming income and effectively call in to question whether someone is truly a farmer. This will prove more of a challenge in the future if we see farm incomes fall with tariff free trade deals on the policitians’ table.

Prior to the pandemic, a lot of tenants on farms were involved in the hospitality sector. Large premises on farms often lend themselves to cost-effective storage of large pieces of equipment such as marquees or catering equipment for outdoor events. Even breweries or sandwich-making companies are utilising these spaces. However, the sad fact is that payment of these rents are proving difficult where such business tenants are unable to open and generate income to cover the rent. An outcome of this is a pandemic moratorium on possession of commercial property or use of enforcement agents to seize goods against commercial rent arrears, although those restrictions are due to end on 30 June 2021 and it will be interesting to see if those restrictions are going to be extended.

Additionally, there are general restrictions on the use of insolvency procedures against companies for bad debts owed – including rent arrears – during or as a result of the coronavirus pandemic called the Debt Respite scheme, or Breathing Space scheme. This protection came into force on 4 May 2021, and gives two Breathing Space scenarios to individuals: a standard Breathing Space and a mental health crisis Breathing Space. It is worth noting however that the Breathing Space scheme does not apply to business debts or business rents if the debt relates to a VAT-registered business, and also if the debtor is a partner in a business with someone else.

If you have any issues relating to Breathing Space please contact Alice Trainor on 07808 613164.