The government has extended the moratorium on forfeiture against commercial tenants for rent arrears to 31 December 2020. This provides protection against eviction for commercial tenants until the end of the year.
Robert Jenrick, the Communities Secretary, has confirmed that the government will also extend the restriction on landlords using Commercial Rents Arrears Recovery to enforce payment of rent arrears to the end of the year.
A chance for businesses to rebuild
The Ministry for Housing, Communities and Local Government stated that the extended moratorium would give businesses the chance to focus on rebuilding over the autumn and Christmas period, but stressed that where businesses could pay their rent, they should do so.
Business Secretary Alok Sharma said: “During this particularly challenging time for businesses, it is crucial that both landlords and tenants have the clarity and reassurance they need to build back better from the pandemic”.
The move came after several large retailers and bodies representing those commercial tenants hardest hit by the pandemic wrote to the government requesting an extension to the moratorium in order to save businesses and jobs.
Whilst the news will be welcomed by commercial tenants, landlords and those who represent them have been lobbying the government not to extend the moratorium.
BPF call for different measures
The British Property Federation (BPF) and others have called instead for measures which help businesses to manage rental payments with government grant support. Landlords are aware that there are some well-capitalised tenants who are more than able to pay rent but are relying on the moratorium in taking the decision not to pay in order to preserve cash-flow. This limits landlords’ income and their ability to provide assistance to those tenants who genuinely need it.
As the period over which there will be a shortfall in rental payments is extended, the BPF also expressed concerns for the health of pensions and savings funds that own high street properties. The BPF called on the government to confirm that this will be the last extension and that it will set out a strategy for landlords and tenants as to how to transition back to more normal market conditions and address the challenge of rent arrears.
It is to be remembered that the moratorium restricts a landlord’s ability to end the lease for non-payment of rent, it does not mean that the liability to pay rent during the period of the moratorium is waived. When the moratorium and other measures put in place to protect commercial tenants are finally lifted, landlords will be able to take action for arrears. Therefore, the extension pushes the issue of the payment of the arrears into the future but does not address how the shortfall will be met.