Commercial tenants who are behind on commercial rent payments have been offered a lifeline, as the Government extends its eviction ban from 30 June 2021 to 25 March 2022, two years after its initial introduction, to offset the continued financial implications of the COVID-19 pandemic.

In addition, the Government have also announced further plans to protect commercial tenants, including:

  • An extension to the existing restrictions on statutory demands and winding up petitions (extended from 30 June to 2021 to 30 September 2021);
  • The introduction of a new Act of Parliament to deal with accrued rent arrears for businesses forced to shut during the pandemic.

The news comes following the Prime Minister’s announcement that the easing of lockdown restrictions will be delayed by a further four weeks minimum to 19 July 2021.

A helping hand for businesses most in need

UK Hospitality and British Retail Consortium (BRC) reported that retail and hospitality firms have accrued a combined £5bn in rent debt, and in Q1 2021, only 74% of rent was collected by commercial landlords.

The extension will provide businesses in these hard-hit sectors with some much-needed breathing space, as many continue to reel from the longer-term impact of the lockdowns. It will also provide the Government with time to draft new legislation in relation to an arbitration system, which will be enacted to resolve disputes between landlords and tenants.

Relief for commercial tenants, but dismay from landlords

Michael Roome, Business Recovery and Insolvency Partner and licensed Insolvency Practitioner comments

“An emergency measure first imposed back in March 2020, the legal block was part of a radical package of measures and prevented landlords from evicting tenants for non-payment. The intention was to soften the economic impact of the pandemic and relieve pressure on businesses whose income had been slashed as a direct result of the COVID-19 pandemic and subsequent lockdown restrictions.”

“But as expected, some commercial landlords are critical of the measures, with some voicing their dismay. Although the Government has promised a new arbitration system will be introduced to resolve disputes between landlords and tenants, it remains unclear exactly how or when this will be. In the meantime, there are concerns some well-capitalised businesses can afford to pay rent but are instead choosing to take advantage of the extended measures – although businesses in sectors where restrictions have been lifted should begin paying rent in accordance with the terms of their lease immediately.”

Local insolvency practitioners, here to help

As we begin to emerge from the COVID-19 pandemic, some companies will understandably have concerns regarding the health of their businesses. Here at Smith Cooper, the sooner we are able to understand your business and the problems you face, the more likely we are to be able to provide a strategic recovery plan, which is in the best interest of all stakeholders.

Should you wish to speak with one of our dedicated advisors on a confidential, no-obligation basis, please do not hesitate to get in touch.