There has been much speculation that the Government will be extending the current moratorium afforded to commercial tenants as a result of the COVID-19 pandemic.
The hospitality and retail industries have now warned that many businesses could be at risk of collapse at the end of September.
It is understood that the Government is preparing to extend measures preventing restaurateurs and retailers from being evicted from their premises until the end of the year. This is an extension on the current deadline of 30 September 2020.
Government officials have advised that the government is currently examining the effect of extending the moratorium and a Government announcement on extending the existing evictions ban could come as early as this week, which is expected to anger landlords who are currently in a difficult position.
However, the government have now announced that it will be extending the moratorium
The Government’s Announcement
The ban on evictions of commercial property tenants was initially introduced in April but was extended to 30 September. Tenants are expected to pay the rent that accrues during the moratorium period, leading landlords to argue against any further extension to the arrangements.
Commercial tenants currently benefit from a number of protections including:
- a prohibition on forfeiture as a result of the tenant’s failure to pay rent; and
- a requirement for 189 days’ worth of rent to be outstanding before a landlord can enforce Commercial Rent Arrears Recovery (CRAR).
The Government has now announced that forfeiture and CRAR protections will be extended until the end of the year. This is to prevent businesses from going under and protecting jobs in the coming months.
What does this mean for landlords?
The Government has stated has made clear that where businesses can pay their rent, they should do so.
However, the announcements are likely to anger many commercial landlords who have seen tenants refusing to pay rent, despite the Government’s previously announced Code of Practice for commercial property during the COVID-19 pandemic. The Code makes it clear that both landlords and tenants “should act in good faith” and that “tenants who are able to pay their rent in full should continue to do so”.
It is not clear at the moment is whether the Government is also intending to extend the restrictions on winding up companies. The reasons for this was to prevent landlords from enforcing arrears by serving statutory demands on tenants.
Options available to Landlord’s
The announcement leaves landlords in a difficult position and with most other remedies unavailable, landlords may only be left with the option of issuing court proceedings against tenants who are defaulting on their rent, if they are unable or unwilling to defer payments until next year.
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