Government extends moratorium by three months

The Government has once again announced an extension to the moratorium on commercial property evictions says agent Prop-Search, this time until at least the end of June and has launched a call for evidence on potential interventions to the rent debt situation.

The moratorium, which was introduced in March last year and has been extended three times already, prevents property owners from pursuing tenants for unpaid rent by legal means, or from evicting them.  The latest extension had been due to expire at the end of this month.

The Government said the majority of commercial landlords have shown “flexibility, understanding and commitment to protect businesses during an exceptionally challenging time”.  But it has launched a call for evidence as it looks to solve the issue of rent liabilities, which has seen the sector build up a debt pile of about £8bn over the past 14 months, with businesses forced to close or trade with heavy restrictions.

Communities secretary Robert Jenrick said: “It is right that as we move through the roadmap, we ensure that businesses and renters continue to be supported.  We have taken unprecedented action to support both commercial and residential tenants throughout the pandemic – with a £280bn economic package to keep businesses running and people in jobs and able to meet their outgoings, such as rent.

These measures build on the Government’s action to provide financial support as restrictions are lifted over the coming months – extending the furlough scheme, business rates holiday and the Universal Credit uplift.

Business secretary Kwasi Kwarteng added: “The Government’s current position is to support commercial landlords and tenants to agree their own arrangements for paying or writing off rent debts by 30 June.  This is supported by the code of conduct published by the Government last year, setting out best practice for these negotiations. But, if these discussions do not happen and there remains a significant risk to jobs, the Government is also prepared to take further steps.”

“We are, therefore, launching a call for evidence on commercial rents to help monitor the overall progress of negotiations between tenants and landlords.  The call for evidence will also set out potential steps that Government could take after 30 June, ranging from a phased withdrawal of current protections to legislative options targeted at those businesses most impacted by covid-19.  We would welcome a broad range of feedback to this call for evidence.”

Commenting on today’s announcement, Samantha Jones, an Associate Director of Prop-Search, said: “While businesses should continue to pay rent wherever possible, the latest measure will ensure no business is forced out of its premises if it misses a payment between up until the end of June.”

“This move will help ease the burden on a range of sectors, including retail and hospitality, at what continues to be an incredibly challenging period of time.  However, the Government’s intervention in the traditional landlord and tenant relationship has left many landlord’s feeling unjustly punished by enabling sometimes well-capitalised businesses to not pay rent and argue it is merely a sticking plaster as the rent will eventually need to be paid.”

The British Property Federation recently estimated total rent unpaid for UK commercial property between late March 2020 and the end of June 2021 will be up to £7bn if the moratorium is extended and the present rate of rent nonpayment continues.  It says rental arrears stood at £4.2bn by the end of 2020 and the moratoriums are creating an increasingly serious problem for both property owners and their customers