The UK Government recently announced that all businesses will be protected from eviction from their commercial premises until 25 March 2022. Landlords will also be prohibited from recovering rent arrears through the seizure of goods until the end of the first quarter next year.
For SMEs in sectors such as hospitality, manufacturing, tourism, and retail, the Government’s statement has provided desperately needed time to rebuild their businesses and cashflows after being unable to trade during multiple periods over the past 17 months.
Communities Secretary Robert Jenrick commented:
“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.”
In another move to protect business owners, the Government has committed to shielding organisations against statutory demands and winding up petitions if they have been affected by the Covid 19 pandemic until 30 September 2021. The easing of conditions in which a company can enter into a Part A1 moratorium also continues until 30 September 2021.
The Part A1 Moratorium is an insolvency process that was introduced by the Corporate Insolvency Governance Act 2020 to help financially distressed businesses obtain temporary protection from creditor action, while the company attempts to rescue itself as a going concern.
Consultation on how to handle the build-up of rent arrears
Although the moratorium on eviction and recovering rent arrears through seizure has been extended, the colossal amount of unpaid rent owed to landlords will not disappear. To ensure that an avalanche of Court action does not occur the moment the current protections are lifted, the Government is considering responses to a consultation on how landlords and tenants are managing or planning to manage rent arrears resulting from the Coronavirus pandemic. Responses have been requested from businesses (especially SMEs); business representative organisations; commercial landlords, lenders, and investors and their representative organisations; commercial property professionals; and anyone with an interest in or connection to the commercial property market in England.
The Government has made clear that:
“If there is evidence that productive discussions between landlords and tenants are not taking place, and that this represents a substantial and ongoing threat to jobs and livelihoods, the government will not hesitate to intervene further.”
The consultation will hopefully reassure business owners that the concept of pain-sharing and resolving disputes through alternative dispute resolution methods are likely to remain the preferred approach.
If you are a landlord or tenant and have concerns about the points raised in this article, such as commercial rent arrears please contact our experienced, friendly Solicitors by booking a free 15-minute consultation.
