Government Extends Moratorium On Commercial Rents

The rent moratorium protecting commercial tenants from eviction for not paying rent, introduced last year in response to the pandemic, will continue until 25 March 2022, the government has confirmed. Restrictions on landlords using laws permitting them to recover rent arrears by selling a tenant’s goods will also be continued.

MP Steve Barclay, chief secretary to the Treasury, delivered an economy update in the House of Commons yesterday (june16), confirming the moratorium extension. In the event of commercial negotiations between tenants being unsuccessful, tenants and landlords will enter binding arbitration.

He said: “All tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord as soon as restrictions are removed on their sector if they are not already doing so. We believe this strikes the right balance between protecting landlords and supporting those businesses that are most in need.

The announcement comes two days after Prime MinisterBoris Johnson announced the delay of easing lockdown restrictions by four weeks, with the new date for the final step of the government’s roadmap set for 19 July.

Commenting on the new legislation, Kate Nicholls, UKHospitality’s CEO, said: “These measures are wholly welcome and will banish a grim shadow that has hung menacingly over hospitality since the Covid crisis began 15 months ago. The legislation will form a strong bedrock for negotiated and fair settlements that can help heal the damage that the pandemic has wrought, and is a hugely positive signal that the Government has been listening to our sector, and acted to ease its plight.

“Thankfully, many landlords and tenants have managed to come to an amicable arrangement over rent arrears, but many could not and the Government’s announcement brings in an equitable solution where there is a sharing of the pain.

“These are unprecedented measures but wholly merited and justified in these unprecedented times, bringing some stability back to an uncertain and unsettled property market. At last, this existential crisis for hospitality looks like reaching a fair conclusion, easing a path to recovery for a sector that can help the national economy back to prosperity.”

Helen Wheddon, Partner at Stevens & Bolton LLP, said: “Landlords and tenants alike may be surprised by the long extension to current tenant protections announced today, until March 2022. Landlords will need to decide whether to wait for the detail of the legislation setting out the ‘binding arbitration’ based on the Australian model or agree terms with their tenants now for less than the full rent due. After this, their options are likely to be limited and they may be forced to issue debt proceedings for the rent owed, but this might also be put on hold by the legislation.

“Today, the Government has afforded businesses a little breathing space, with a clear expectation that landlords and tenants should try to reach agreement on the rental debt if they have not done so already. Decisions will still have to be made before landlords and tenants find their hands tied by this new process.”