The Government has confirmed that it will be renewing the measures it introduced to protect tenants in the commercial property sector unable to pay their rent due to the COVID-19 pandemic. Currently, commercial tenants benefit from a prohibition on landlords forfeiting commercial leases for non-payment of rent. This measure was due to expire on 31 March 2021, and despite the Government confirming in December 2020 that this would be the final extension to protections from the threat of eviction, the Government has announced that the restriction on forfeiture will in fact be extended until 30 June 2021.
The Government has also renewed the restriction on landlords using Commercial Rent Arrears Recovery (CRAR) to recover unpaid rent, which was due to expire on 31 March 2021, but has now been extended until 30 June 2021. This measure will increase the total number of days’ outstanding rent required for CRAR to be used to 457 days if CRAR is to be used between 25 March and 23 June, increasing to 554 days’ if CRAR is to be used between 24 and 30 June. It is not yet clear whether the Government will extend the measures introduced by the Corporate Insolvency and Governance Act 2020 restricting the use of statutory demands and winding-up petitions which is due to expire on 31 March 2021.
The Government’s position is that it will endeavour to support commercial landlords and tenants to agree their own arrangements for paying off and writing off rent debts by 30 June 2021, supported by the Government’s Code of Practice published in 2020. However, although a large number of landlords and tenants will have engaged proactively to seek a joint approach to navigate the effects of the pandemic, a number of landlords have had to contend with tenants simply refusing to pay rent even though they can and should be paying, or using the measures as an opportunity to seek to restructure their lease obligations, and there will be concern amongst landlords that the continuation of these measures will do nothing to unlock the stalemate or allow the market to recover. In an effort to help monitor the overall progress of negotiations between tenants and landlords, the Government has indicated that it will be launching a call for evidence on commercial rents which will also set out potential steps that the Government could take after 30 June 2021, ranging from a phased withdrawal of current protections to legislative options targeted at businesses most impacted by the COVID-19 pandemic.
The Government has also reiterated its intention to review landlord and tenant legislation relating to the commercial property sector later this year to consider a broad range of matters including Part II of the Landlord and Tenant Act 1954 (security of tenure), different models of rent payment and an analysis of the impact of coronavirus on the market. We will provide further updates when the Government publishes its proposals.
For further information on the Government’s announcement, please view press statement.
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