Commercial landlords banned from using ‘aggressive’ rent collection tactics
UK shops, restaurants and pubs will be protected against aggressive rent recovery action during the coronavirus crisis after the government issued new rules for commercial landlords.
The government has temporarily banned the use of statutory demands and winding up orders until at least June following pressure from the retail and hospitality sectors.
Many retail, hospitality and leisure tenants have struggled to pay rent while their sites are closed during the coronavirus lockdown, with some warning forced payment could result in business failures and job losses.
Landlords will also not be able to use Commercial Rent Arrears Recovery unless they are owed 90 days of unpaid rent.
“This extra space will allow businesses to survive and to find a way to work with landlords,” said UK Hospitality chief executive Kate Nichols.
She added: “If social distancing measures are to be in place for some time, as we now believe they will, this measure may need to be extended to ensure that businesses can survive.”
However, concerns have been raised over the impact the measures could have on commercial landlords who may also be struggling financially.
The government has said tenants should pay if they can and work with landlords to come to an agreement.
“I know that like all businesses they are under pressure, but I would urge them to show forbearance to their tenants,” business secretary Alok Sharma said.
Nickie Aiken, MP for Westminster and the City, told City PM that the new measures would be a “lifeline” for small and independent businesses, but warned that “big players” on the high street must pay rents.
Vivienne King, chief executive of retail property association Revo, which represents both tenants and landlords, said: “The moratorium on evictions, while well-intended, has been exploited by some well-capitalised businesses as a rent holiday.
“A moratorium on winding up petitions and statutory demands removes the incentive of last resort for property owners and there is every reason to fear it will also be used in the same way.”
British Property Federation chief executive Melanie Leech added: “Alongside extending additional protection to tenants, the government should be robust in encouraging landlords and tenants to work together and making clear that those businesses who are able to meet their liabilities should do so, for the long-term health of the complex funding ecosystem underpinning the UK’s economy.”