Businesses that have had to remain closed during the pandemic and are unable to pay rent on their commercial property will continue to be protected from eviction, the UK government has announced.
The legislation, designed to aid certain hospitality businesses to recover from the pandemic, will ringfence outstanding unpaid rent that has built up when a company 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.
The government said the legislation - which will see the existing measures extended until 25 March 2022 - is also designed to help tenants and landlords work together to come to an agreement on how to handle the money owed. This can be done by waiving some of the total amount or agreeing a longer-term repayment plan.
Additionally, and in order to ensure landlords are protected, the government is making it clear that tenants should start paying their rent as soon as restrictions change, and they’re able to open.
Commenting on the news, communities secretary Robert Jenrick said: “As we continue to lift restrictions and start to return to business as usual, tenants and landlords should be preparing to pay rent or come to an agreement if they have not done so already.”
The move - which follows a call for evidence from stakeholders including landlord groups, lenders and investors - will also see restrictions on landlords’ abilities to recover rental arrears through the seizure of goods to the 25 March 2022.
Business secretary Kwasi Kwarteng said: “The new arbitration process will be underpinned by law, providing 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 £350bn package of support that has been available throughout the pandemic.”
Alongside this, restrictions on statutory demands and winding up petitions will be extended for a further three months from 30 June 2021 to 30 September 2021. The move is designed to protect companies from creditor enforcement action due to debts related to Covid-19.
Commenting on this news, insolvency and restructuring trade body R3’s vice-president Christina Fitzgerald said: “While the extension of these measures will benefit many companies, as time goes on the government will need to consider the impact on creditors - who have staff and overheads to pay themselves. Balancing these interests is a difficult task for the government.
“However, this decision also gives directors and business owners a further - and possibly final - window to plan how they will take their businesses forward when these temporary measures end.
“We urge them to use this time to seek advice from a qualified professional - and to do so as early as possible, so they can benefit from the broadest range of options available and have a greater time period to decide how they will move forward.”