The Scottish government has introduced a new law that temporarily halts debt recovery actions against certain tenants with certified mental illnesses.
Under the Bankruptcy and Diligence (Scotland) Act 2024, individuals experiencing a severe mental health crisis that affects their ability to manage debts will receive legal protection.
Those who meet specific eligibility criteria, which focus on the most serious mental health conditions, may be granted a protected period. During this time, creditors are prohibited from pursuing outstanding debts or initiating recovery proceedings, providing a crucial safety net for vulnerable individuals.
Propertymark, the lettings agency trade group, has voiced its support for the new law, recognising its potential to provide critical financial relief for tenants experiencing severe mental health crises. The organisation has emphasised that this measure is designed to act as a temporary “breathing space” for those who, due to their mental health condition, are unable to manage their debts effectively.
Under this moratorium, all debt-related communications, including calls, letters, legal proceedings, and enforcement actions, would be temporarily halted. This means that landlords would be prohibited from taking legal steps to recover unpaid rent during the protected period. Additionally, interest charges and other fees associated with outstanding debts would be suspended, preventing the financial burden from worsening while the tenant is in crisis.
To be eligible for this protection, tenants must obtain formal certification from a qualified medical or mental health professional confirming that their condition severely impacts their ability to manage their finances. However, the scheme is designed to avoid overlap with existing financial aid programmes. As a result, individuals who are already in bankruptcy proceedings or enrolled in a structured debt repayment plan will not qualify for the moratorium.
The duration of the protection is determined by the individual’s mental health status. As long as they are considered to be in crisis, the moratorium will remain in effect, offering them vital relief from financial pressures. However, it is important to note that while debt recovery actions are paused, the tenant remains responsible for their ongoing financial obligations, such as paying their current rent. This ensures that they do not accumulate additional arrears during the protected period, helping to maintain stability once the moratorium ends.
Supporters of the initiative argue that this temporary pause is essential for individuals facing acute mental health challenges, giving them time to recover without the added stress of aggressive debt collection efforts. Critics, however, have raised concerns about the potential impact on landlords and creditors, who may struggle to recover unpaid debts if the tenant’s financial situation does not improve.
Ultimately, the law aims to strike a balance between offering essential support to vulnerable individuals while maintaining fairness in the rental market. By providing a structured and temporary relief period, it seeks to ensure that tenants experiencing mental health crises are not unfairly penalised for circumstances beyond their control.
Propertymark has also addressed concerns regarding how the Mental Health Moratorium could impact possession proceedings for rent arrears. The organisation clarifies that the proposed rules would not prevent landlords from serving notice or applying for repossession due to unpaid rent.
However, Propertymark supports this approach, noting that Scotland already has robust protections in place to prevent unfair evictions. Under existing regulations, landlords must adhere to pre-action protocols before taking steps to evict a tenant over arrears. Additionally, the First-tier Tribunal is required to assess whether an eviction is reasonable based on the tenant’s circumstances before granting approval.
Further protections are also set to be introduced under the Housing (Scotland) Bill. These measures would require courts to consider delaying an eviction if proceeding with it would have a detrimental impact on the tenant’s health. Propertymark argues that courts and tribunals should be informed whenever a tenant facing eviction for rent arrears is covered by a Mental Health Moratorium. This would ensure that the tenant’s health crisis is properly taken into account when making legal decisions.
To maintain fairness for all parties involved, Propertymark is calling for clear guidance to help landlords and letting agents navigate situations where a tenant under a Moratorium has fallen behind on rent. The organisation stresses the need for a balanced approach—one that acknowledges the tenant’s right to temporary financial relief while also considering the landlord’s right to recover unpaid rent. By implementing consistent procedures, landlords can manage arrears responsibly while ensuring that vulnerable tenants receive the support they need.
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