Against a background of large scale non-payment of rent by commercial tenants, the Government is acting again to restrict landlords’ ability to enforce their rights.
Previously, under the Coronavirus Act 2020, the Government had restricted the right for landlords to forfeit leases by a moratorium that lasts until 30 June 2020, subject to extension. Please see our earlier tip on forfeiture here.
On 23 April the Government published a press release entitled "New measures to protect UK high street from aggressive rent collection and closure". This sets out its plans to introduce temporary measures to, as it put it, “safeguard the UK high street against aggressive debt recovery actions during the coronavirus pandemic”.
This includes temporarily voiding statutory demands and winding up petitions issued to commercial tenants, and limiting the use of Commercial Rent Arrears Recovery to cases where the tenant owes more than 90 days of unpaid rent.
Although, as ever, the devil will be in the detail, this will restrict any real threat of action that a landlord has against non-paying tenants. Obviously the objective is understandable, to save businesses in extreme cash flow difficulties due to the current lockdown, but it is difficult to see how the new legislation could discriminate between those who can and cannot afford to pay. All of these matters have to have a balance and, given that many of those businesses are already benefiting from rates holidays and Government money paying furloughed wages, there may be questions as to whether the right balance has been achieved.
Melanie Leech, Chief Executive of the British Property Federation, said of the proposed changes that “Alongside extending additional protection to tenants, the Government should be robust in encouraging landlords and tenants to work together and making clear that those businesses who are able to meet their liabilities should do so, for the long-term health of the complex funding ecosystem underpinning the UK’s economy.”