The moratorium on evictions from commercial property has been extended by the government until 31st March 2021. This is to protect those business owners affected by the pandemic from the threat of eviction.
The existing arrangements, which had already been extended twice since the start of the pandemic, were due to expire on New Year’s Eve. The arrangements surrounding Commercial Rent Arrears Recovery (CRAR) have also been extended until the end of March next year.
Final extension of the moratorium on commercial evictions
The government has signalled that this will be the final extension provided to protect commercial tenants from the threat of eviction. It gives landlords and tenants a further three months to come to an agreement on unpaid rent.
There will be further guidance published shortly to support negotiations between landlords and tenants. However, the government has made it clear that those businesses who can pay any or all of their rent should continue to do so.
This guidance will sit alongside the Code of Practice, which was published in June. This set out how both parties should take part in negotiating rent payments where businesses have suffered financially due to the pandemic.
Commenting on the changes to the legislation, Secretary of State for Housing Robert Jenrick MP said: “I am extending protections from the threat of eviction for businesses unable to pay their rent until March 2021, taking the length of these measures to one year. This will help them recover from the impact of the pandemic and plan for the future.
“This support is for the businesses struggling the most during the pandemic, such as those in hospitality – however, those that are able to pay their rent should do so.
“We are witnessing a profound adjustment in commercial property. It is critical that landlords and tenants across the country use the coming months to reach agreements on rent wherever possible and enable viable businesses to continue to operate.”
Commercial Rent Arrears Recovery (CRAR)
The restrictions on the use of CRAR by landlords to recover unpaid rent will also be extended until 31st March 2021 in line with the moratorium on lease forfeitures. This is designed to provide businesses who have suffered financially due to the Covid-19 pandemic enough breathing space to come to arrangements with their landlord over rent arrears.
The current legislation on the use of CRAR is:
– Between 29th September and 24th December 2020, the equivalent of 276 days rent must be owed before a notice of enforcement can be issued or goods taken into control.
– From 25th December 2020, the amount of rent arrears required will rise to 366 days before a notice of enforcement can be issued or goods taken into control.
Business Secretary Alok Sharma said: “We have stood by businesses across the country throughout this pandemic, and as we head into the New Year we will make sure they continue to have the support they need to keep their finances stable, protect jobs and build back better.
“There is still some uncertainty ahead, but knowing that they won’t be evicted by their landlord will give thousands of business owners some breathing space and the additional confidence they need to plan for their futures.”
Review of commercial landlord and tenant legislation
Today, the government also announced that a review of the current commercial landlord and tenant legislation will be launched in early 2021. There have been concerns raised that the current framework is outdated and doesn’t reflect the current economic conditions.
This will consider a number of issues, including the Landlord and Tenant Act 1954 Part II, the impact of coronavirus on the market and different models of rent payment.
Use of statutory demands and winding-up petitions
The temporary measure introduced by the Corporate Insolvency and Governance Act, which restricts the use of statutory demands and winding-up petitions, has also been extended until the end of March 20201. This had been due to expire on 31st December 2020.
This move will protect companies from any aggressive enforcement action to collect on debts owed as a result of the coronavirus pandemic. It provides them with breathing space to negotiate with creditors or restructure the business.
Further Information:
Ban on commercial property evictions extended
Almost three quarters of commercial rent paid since September Quarter day