The Government has announced that a ban on landlords evicting firms for unpaid commercial rent is being extended for another nine months.
The ban, which stops landlords from taking tenants to court for non-payment, was due to end on 30th June.
The Government says that the extension to the order will give places such as nightclubs and other hospitality businesses the help they need to recover from the pandemic, Communities Secretary Robert Jenrick has announced that legislation will be introduced to ringfence outstanding unpaid rent that has built up when a business has had to remain closed during the pandemic. Landlords are expected to make allowances for the ringfenced rent arrears from these specific periods of closure due to the pandemic and share the financial impact with their tenants.
The legislation will help tenants and landlords work together to come to an agreement on how to handle the money owed – this could be done by waiving some of the total amount or agreeing on a longer-term repayment plan.
In order to ensure landlords are protected, the government is making clear that businesses that are able to pay rent, must do so. Tenants should start paying their rent as soon as restrictions change, and they are given the green light to open.
The existing measures in place to protect commercial tenants from eviction will be extended to 25th March 2022.
Communities Secretary Robert Jenrick said “We have provided unprecedented support to businesses to help them through the pandemic. However, as we continue to lift restrictions and start to return to business as usual, tenants and landlords should be prepared to pay rent or come to an agreement if they have not done so already.”
“This special scheme reflects the unprecedented nature of the pandemic and responds to the unique challenges faced by some businesses. It strikes the right balance between protecting landlords while also helping businesses most in need, so they are able to reopen when it is safe to do so.”
“They will ensure many viable businesses can continue to operate and debts accrued as a result of the pandemic are resolved to mutual benefit swiftly. The government has committed £350 billion to keep businesses running, people in jobs and ensure we can build back better from the pandemic.”
Business Secretary Kwasi Kwarteng said “Sorting out commercial rent debts will be key to enabling businesses to plan ahead with certainty and ultimately build back better from the pandemic. The new arbitration process will be underpinned by law, providing commercial tenants and landlords with peace of mind that Covid-related rent debts will be settled fairly, and with finality. In the meantime, I encourage landlords and tenants to keep working together to reach mutually beneficial agreements.”
“Extending the ban on commercial evictions is a necessary measure to help businesses through the final stages of the pandemic, and comes on top of our generous £350 billion package of support that has been available throughout the pandemic.”
Chief Secretary to the Treasury Steve Barclay said “We’ve helped businesses and landlords to get through the pandemic with our £350 billion plan for jobs, including the furlough scheme, generous grants and business rate support – and this support is continuing through the summer months.”
“We welcome ongoing negotiations between landlords and tenants about accrued rent as we continue to recover from the pandemic. To support these, we’re now providing a new backstop to help businesses and tenants to return to normal. This will help preserve jobs and livelihoods as we build back better.”
Kate Nicholls, UKHospitality’s CEO, said “We welcome these measures as they will banish a grim shadow that has hung over hospitality since the Covid crisis began. This legislation will form a strong bedrock for negotiated settlements that can help heal the damage that the pandemic has wrought, and we are pleased that the government has listened to our sector, and acted to ease its plight by bringing in an equitable solution where both landlords and tenants share the pain.”
Dr Roger Barker, IoD’s Director of Policy, said “Whilst this will be welcomed by businesses right across the country, the Treasury must go further. This is only one element of the cliff edge that we have been calling on government to address. At the end of this month businesses will still face the tapering off of furlough and business rates relief, and the suspension of wrongful trading liability.”
“During most of the pandemic, government has followed the principle that business support measures must run in parallel with public health restrictions. The prudent move would be to commence the tapering down process on the other side of lockdown, after and not before 19th July.”
“The government must hold its nerve and push out its business support measures until the job is properly done.”
FSB National Chair Mike Cherry said “This announcement will be a big relief for many anxious small business tenants who have been dealing with a huge amount of disruption over the last 15 months. In many cases they were two weeks away from facing legal proceedings for rent they could not afford, for premises that have been shut. Many will have had no opportunity to raise any revenue, as they have been unable to use their premises for a prolonged period.”
“We’re pleased to see the moratorium will be extended for a meaningful amount of time, allowing more breathing room for small firms to embark on negotiations with their landlords, rather than worrying about it ending up in court. The clear signal from today is that landlords should now join these discussions, rather than simply waiting to launch a legal bid for 100% of rent for the whole period.”
“Action on encouraging negotiations about historic rent arrears between landlords and small business tenants is much needed. The next step is key, which is how the Government will design the binding mediation system for historic arrears. This ‘back-stop’ system is focused on businesses that have been forcibly closed, which does not include the supply chain. This means that the Government must move forward with the plans for £1.5bn of business rates support for this group.
“We hope these changes will all help to incentivise landlords to enter into positive negotiations with their tenants.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said “This is a very welcome announcement, addressing an issue of vital importance in the nick of time. We will be looking closely at the details, but welcome the continued support provided by Government to businesses.”
“Just as retailers feared a wave of legal action by landlords, the Government has stepped in to offer both landlords and tenants more time to negotiate. The last 15 months have seen extended periods of forced closure for retailers, preventing many from making the turnover needed to cover rents. Retailers need time to trade their way out of debt; this announcement does exactly that. We’re also pleased to see the Government adopt our proposal for binding arbitration where agreements between parties cannot be reached.”
Cameron Gunn, Senior Partner at ReSolve said “Businesses need to make the most of the Government’s latest extension to the moratorium on evicting commercial tenants. Rather than squander this opportunity – businesses should take the time, now, to figure out how they can negotiate, reschedule, refinance, and perhaps restructure their affairs to ensure they not only survive the next nine months but thrive, thereafter.”
“Whilst March 2022 sounds like a long way away, it will come far quicker than they think and forbearance is not forgiveness. Businesses should open dialogue with their landlords now (if they haven’t already) with the intention of finding a balanced solution to deal with their arrears and ongoing obligations that works for all parties. Communication is key and if there is one thing that COVID-19 has made abundantly clear it’s that creditors can and will generally negotiate with empathy if businesses act openly, transparently and negotiate in good faith. Our message is this – do not waste this opportunity. Take action now.”