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The Government has set out a new range of measures to prevent commercial landlords putting pressure on tenants who are unable to pay rents due to Covid-19 says commercial property agent Prop-Search.
High street shops and other companies strained by the coronavirus pandemic will now be protected from aggressive rent collection and asked to pay what they can while the crisis persists. Debenhams, House of Fraser and Top Shop owner Arcadia are among those who have fought battles with landlords to keep stores open. Some companies have refused to pay their rent including Travelodge.
The UK Government has now said it will temporarily ban the use of statutory demands and winding up orders where a company cannot pay their bills to ensure they do not fall into deeper financial strain. The measures will be included in the Corporate Insolvency and Governance Bill, which the Business Secretary Alok Sharma set out earlier this month.
In his announcement, Mr Sharma said: “In this exceptional time for the UK, it is vital that we ensure businesses are kept afloat so that they can continue to provide the jobs our economy needs beyond the coronavirus pandemic.”
“Our unprecedented package of support can help commercial landlords, including through the recent expansion of the Coronavirus Business Interruption Loans Scheme.”
“I know that like all businesses they are under pressure, but I would urge them to show forbearance to their tenants. I am also taking steps to ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the Covid-19 emergency continues.”
The temporary emergency measures are designed to acknowledge the pressures landlords are facing while encouraging cooperation in the spirit of fair commercial practice. They also come on top of a substantial package of business support measures, including a moratorium on evictions for commercial tenants for at least a three-month period.
Samantha Jones, an Associate Director of Prop-Search and Retail Specialist, added: “The move is welcomed, particularly by the retail and hospitality sector, where many businesses presently have no revenue whatsoever coming in; so paying rents have been out of the question for some. These new measures will give them some very valuable breathing room.”
Statutory demands and winding up petitions issued to commercial tenants will now be temporarily voided and landlords will be prevented from using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.
The new legislation will be in force until 30 June, but can be extended in line with the moratorium on commercial lease forfeiture.