Temporary protection for business owners who cannot pay their rent as a result of the pandemic has been extended several times since its introduction in March 2020.
The most recent review extended the scheme until the end of June 2021 in a bid to protect those businesses hardest hit by lockdown and Covid restrictions.
In practice the commercial rent arrears protection means that:
- commercial tenants who are experiencing cashflow problems cannot be evicted for failure to pay their rent,
- the ability of landlords to recover rent arrears through the seizure of tenants’ goods is restricted, and
- the service of statutory demands and winding up petitions is also restricted.
The emphasis throughout the Covid crisis has been on landlords and tenants working together to reschedule payments and reduce or waive rent arrears. However, clearly the restrictions currently in place to protect commercial tenants must be lifted at some point and crunch time appears to be just around the corner.
In anticipation of this, the government has conducted a consultation exercise to help decide the best way to withdraw or replace the commercial rent arrears protection measures.
The aim was to gain a picture of how landlords and tenants have responded to rent arrears that have arisen during the pandemic and to use this information to aid the government’s understanding of the risk posed by rent debts on economic recovery.
Their priority is to withdraw the measures currently in place in a way that continues to protect businesses, although they did state 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 proposed a number of possible options:
- Allowing the current restrictions to expire on 30 June.
- Suspending commercial lease forfeitures but keeping the restrictions on insolvency and commercial rent arrears recovery.
- Allowing the existing measures to remain in place for those businesses most affected by the pandemic.
- Enhanced mediation provided by a third party to help landlords and tenants reach a settlement.
- Non-binding adjudication between landlords and tenants.
The responses received during the consultation exercise are now being considered and plans created for a solution that is fair, reasonable and acceptable to both landlords and tenants.
Watch this space for the outcome!