COVID: eviction protection for struggling businesses extended
Businesses that have had to remain closed during the pandemic and are unable to pay rent on their commercial property will continue to be protected from eviction. The temporary moratorium against forfeiture of a lease for non-payment of rent has been extended by nine months, until 25 March 2022.
The moratorium on commercial evictions was first introduced in April 2020 and was later extended until September last year. The policy was then extended further, due to close at the end of June but has now been given even further extension into next year.
The government has also extended the temporary restriction stopping landlords from bringing Commercial Rent Arrears Recovery (CRAR) proceedings against commercial tenants in arrears, until 25 March 2022. When they apply, CRAR proceedings permit landlords to give a notice to pay to tenants whose arrears have reached a certain level. If the tenant does not comply, the landlord can seize the tenant’s assets and sell them at auction.
“Extending the ban on commercial evictions is a necessary measure to help businesses through the final stages of the pandemic, and comes on top of our generous £350bn package of support that has been available throughout the pandemic”, said Business Secretary Kwasi Kwarteng.
The temporary prohibition stopping landlords from using statutory demands against commercial tenants who are in arrears of rent because of COVID-19 has also been extended again, to 30 September 2021. Ordinarily, if a landlord serves a statutory demand for arrears and the tenant fails to pay within 21 days, the landlord becomes entitled to petition the court to have the tenant wound up.
New ringfencing law around built-up rent arrears
In addition, the government has said it intends to bring in new laws that will ‘ringfence’ arrears of rent that have built up during the pandemic. Once COVID-19 restrictions are lifted, landlords will need to make allowance for them and share their impact – for example, by making an agreement with their tenant to waive part of that amount, or accepting a long-term repayment schedule.
Communities Secretary Robert Jenrick, who announced the ringfence legislation, said: “This special scheme reflects the unprecedented nature of the pandemic and responds to the unique challenges faced by some businesses. It strikes the right balance between protecting landlords while also helping businesses most in need, so they are able to reopen when it is safe to do so.”
If they fail to reach such an agreement, an automatic, legally binding arbitration procedure will apply, presided over by approved private arbitrators. No detail has yet been given as to the approval criteria for arbitrators, or which factors they will take into account when deciding whether, when and how a landlord will be allowed to recover all or any of the outstanding rent.
To ensure landlords are protected, the government is making clear that businesses that are able to pay rent must do so. Tenants should start paying their rent as soon as restrictions change, and they are given the green light to open.