To provide further support for commercial tenants during this tough economic period, the Government has laid out further changes to the Commercial Rent Arrears Recovery (CRAR) process. It has also introduced measures to prevent statutory demands and winding up petitions being served on tenants by commercial landlords.
However, all of these changes don’t provide any help for commercial landlords. They still have loans and mortgages that require servicing, but, as yet, the government has not introduced any support measures for them. During the coronavirus pandemic, what options are available for commercial landlords and how will these changes affect the action they can take?
COVID-19 and CRAR
Alok Sharma. the Business Secretary, introduced changes at the end of April to prevent unscrupulous commercial landlords from chasing tenants for rent arrears. Landlords will now have to wait until the tenant owes at least 90 days of rent before they can begin the CRAR process.
However, these actions by the government aren’t intended to stop commercial tenants paying their rent altogether. They are being encouraged to pay what they can afford during the coronavirus crisis and their arrears will still be due in the end.
The quarter rent due in March (which amounts to 91 days) can already be covered by the CRAR process. With the next quarter’s rent due at the end of June, commercial tenants should be paying if they are able to. Otherwise, they could end up with substantial arrears within a matter of weeks. With many businesses able to apply for government backed loans and grants, where possible, these should be used to keep on top of rent payments.
Ban on lease forfeitures
At the start of the coronavirus crisis, the government announced that there would be a moratorium on forfeiture of leases for rent arrears until at least 30th June 2020. This means that commercial landlords are unable to take action to gain back possession of their premises because of rent arrears. Forfeiture for other breaches of the lease are still possible, but tenants need to first be served with notice to rectify the issue.
Statutory demands and winding-up petitions
Alongside the new measures surrounding CRAR, the government has also made changes to the use of statutory demands and winding-up petitions. Up until 30th June, there is now a ban on the use of these actions by commercial landlords where the tenant is in financial difficulties due to the coronavirus. These changes will all be included in the Corporate Insolvency and Guidance Bill.
Support for commercial landlords
During these changing circumstances, we are working with commercial landlords and their tenants to come to a conclusion that is amenable to them both. For more information on what help is available for commercial landlords throughout the coronavirus crisis contact our experienced team today. We can talk you through the various options available and help you to collect any arrears as quickly as possible.
To find out more contact our commercial property team on 0113 532 8350 or email office@bailiffcompany.co.uk.
More information
Coronavirus – Options available to commercial landlords
Keeping your business secure during the coronavirus crisis
Commercial rent during coronavirus crisis – FAQs
COVID-19 and support for commercial landlords