UK Extends Commercial Property Moratorium
Earlier this year, we wrote a blog detailing the temporary moratorium on evictions introduced by section 82 of the Coronavirus Act 2020 in our blog Government moves to provide commercial tenants with further protection.
This month, it was announced that the Government would extend a ban on commercial landlords evicting tenants until March 31 next year, providing more breathing space to companies hit hard by the coronavirus crisis. The moratorium was introduced to provide support to those whose income had been hit by furlough or redundancy allowing them to continue business (if they can) without fear of landlords using the legal process to pursue them for unpaid rent, or to evict them.
Robert Jenrick, the Governments’ Communities Secretary has been quoted as saying “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,”. The moratorium has been criticised by some Landlords, as tenants have been taking advantage of this and not paying their rent, even if they are able to do so. Similarly, Tenants have accused some landlords of seeking to bypass the temporary arrangements by cashing in property deposits in lieu of unpaid rent.
Whilst the moratorium does allow landlords additional time to recover financially, particularly those in hard-hit sectors such as the hospitality industry it does nothing to stop the increasing cost of their rent arrears. The UK Rent Debt is reported to reach about £1.6bn for UK hospitality businesses alone by the end of this year. Many businesses have reached an agreement with their landlords regarding the rent arrears, but it is suggested that about 20% of businesses have not yet done so. The government have announced that this latest extension to the moratorium will be the last extension.
On Sunday 20th December, tighter restrictions relating to Coronavirus have been implemented for a number of regions, including the entirety of London and large parts of the South East. This will have a huge impact on not just individuals and their families with Christmas just mere days away, but for many industries such as the Hospitality industry, with many pubs usually able to make 25% of their profit in December alone. Even for those pubs and restaurants that are in lower-tier areas in the UK, many will not expect to take more than 20% in takings that they would in previous years. So whilst the extension of the moratorium will come as a relief to many, the issue will remain as whether they will be able to survive during this ongoing health crisis to be able to repay their arrears, or even continue to trade into 2021 and beyond.
If you are a commercial landlord or tenant who requires further advice and support on your rights and obligations in this constantly evolving landscape, please get in contact with our commercial property law team to discuss further.
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