Retailers hit by the coronavirus crisis will be protected by new laws that will ban landlords from taking aggressive action to extract rent arrears.
The government is to implement temporary measures to stop landlords using statutory demands, winding up orders and Commercial Rent Arrears Recovery (CRAR) to obtain rent that is unpaid as a result of the ongoing lockdown.
Ministers believe the new laws will protect local high streets and help preserve millions of jobs.
The Coronavirus Act 2020, introduced on 25 March, safeguards commercial tenants by preventing the forfeiture of commercial leases for non-payment of rent until 30 June 2020 – a period that may be extended if necessary.
This measure has not to date, stopped landlords claiming unpaid rent in other ways, including using statutory demands and commencing winding up proceedings.
Eleanor Longworth, associate solicitor at WHN Solicitors, commented: “The upshot of the impending legislation is that commercial landlords will no longer be able to use statutory demands and issue winding up proceedings if the reason the tenant can’t pay is down to coronavirus.”
“In addition, there are to be restrictions on a landlord’s ability to use CRAR, which ordinarily allows landlords to instruct agents to seize goods to discharge debts, unless landlords are owed at least 90 days of unpaid rent
“The clear government objective is to assist tenants and ease the financial burden in the hope that they will survive the crisis and continue to trade when the restrictions are lifted.”
However, there is widespread concern about the predicament of commercial landlords who rely on rental income stream to stay in business.
Eleanor said: “Landlords may be left with a significant gap in cash flow, with insurance premiums and contractors still to be paid. Government initiatives to date have been tenant focused, with little being done to help landlords who may themselves be under significant financial strain.
“Although ministers have urged banks and investors to consider ways to address these issues, many landlords will be at the mercy of their lenders. We hope the banks too will adopt a cooperative approach in order to ease this enormous burden.”
