The Communities Secretary, Robert Jenrick, announced on the 16 September 2020 that the current moratorium on commercial evictions will be extended until the end of 2020. This is part of a wider financial package, consisting of £160 billion promised by the government to protect jobs, incomes and businesses.
What is the moratorium on commercial evictions?
The moratorium on commercial evictions is just one of the many measures brought in as a response to the financial pressures faced by many businesses due to the effects of the Covid-19 pandemic. It was brought in in March under the Coronavirus Act 2020, and will be effective at least until the end of the year.
It prevents commercial tenants from being evicted by their landlords due to non-payment of rent in the period between 26 March 2020 and 31 December 2020.
This was initially brought with an end-date of 30 June 2020. This has since twice been extended: first until the 30 September 2020 and now until 31 December 2020.
Those who can pay their rent should do so. Those who cannot will be expected to repay the rent arrears accrued once the moratorium period has ended.
Why has the government extended the moratorium period?
The hospitality industry wrote to the government, asking for an extension of the moratorium. Given the end of the Eat Out to Help Out scheme and the quarterly rent falling due on the 29 September 2020, many hospitality businesses felt that they could be vulnerable if the moratorium ended on 30 September 2020.
The government have placed much focus on what is needed to ensure people keep their jobs during this period. One clear way of helping to do so is to ensure businesses are able to keep their premises.
Why are landlords not happy with this extension?
Landlords have warned that the commercial eviction moratorium risks harming those who have invested in the property market.
In addition, the system is vulnerable to abuse. Melanie Leech, who is the chief executive of the British Property Federation has warned that it “must come to an end as well-financed businesses have been exploiting the government intervention to avoid paying rent”. She also voiced that the debt is already at “unsustainable levels”.
Are there any other options available to landlords?
Depending on the agreements in place, a landlord could attempt to recover the rent from another party e.g. guarantor or subtenant.
A landlord could bring a claim for the debt. However, it can be costly and it may be difficult to recover monies.
Forfeiture other than for non-payment of rent. However, this can be costly and uncertain.
Wait it out.
If you are a business facing financial difficult or a landlord seeking to explore what options are available to you, please get in touch with Farleys’ litigation team on 0845 287 0939 or contact us by email.