Yesterday, it was confirmed that the ban on commercial evictions is set to be extended. Landlord & Tenant lawyer Will Bartley looks at the extension, outlining the key dates and discussing the impact for commercial landlords and tenants.
What is the commercial eviction ban?
The commercial eviction ban, or 'debt moratorium', essentially prevents landlords from taking their tenants to court over unpaid rent when those businesses have been prevented from trading.
When has the ban on commercial evictions been extended to?
Treasury Secretary Stephen Barclay confirmed that the commercial eviction ban has been extended by nine months, now ending on 25th March 2022. The ban was originally due to end on 30 June, but this extension means that the eviction ban will have run for 2 years since its implementation.
Mr Barclay said: "Existing measures will remain in place, including extending the current moratorium to protect commercial tenants from eviction to March 25, 2022."
The restrictions on landlords recovering rent arrears by selling tenant's goods has also been extended.
How does the commercial eviction ban extension affect tenants?
Helen Dickinson, chief executive of the British Retail Consortium, said: "Just as retailers feared a wave of legal action by landlords, the government has stepped in to offer both landlords and tenants more time to negotiate. Retailers need time to trade their way out of debt; this announcement does exactly that."
How does the commercial eviction ban extension affect landlords?
Melanie Leech is the chief executive of the British Property Federation. In reaction to the commercial eviction ban extension, she was critical of the extension, saying: "The government has failed to recognise that commercial property owners are essential to the health of our town centres - to creating economic growth, jobs and opportunity."
Melanie went on to add that the extension "will provide further opportunity for well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners' support."
What landlord & tenant protections will be in place after the end of the commercial eviction ban?
Secretary Barclay announced plans for the introduction of an arbitration scheme to resolve commercial landlord and tenant disputes, after the lifting of the ban. The scheme will aim to balance business support measures with landlord protection.
The secretary was clear to add that tenants will still be expected to pay rent once the eviction ban ends; and that the planned scheme does not change that.
The extension applies to all businesses, but the new measures that will be introduced by primary legislation will only cover those impacted by closures. This mean that rent debt accumulated before March 2020 and after the date when relevant sector restrictions on trading are lifted, will be actionable by landlords as soon as the tenant protection measures are lifted.
A landlord & tenant lawyer's view
Will Bartley says: "The sentiment behind extending the ban is clear to see; being an increased opportunity for businesses to recover from the ongoing pandemic, especially with the further extension of restrictions, and allow commercial tenants the opportunity to trade their way out of arrears. However, the length and severity of the extension appears hard to justify.
A further 9 month extension sees the ban eclipse the 2 year mark, and it is hard to see how that can be equitable for commercial landlords, many of whom will now be facing severe financial difficulty themselves. The Government has implemented a number of measures to protect residential landlords and tenants, with criteria for rent-arrears based evictions throughout the pandemic.
Yet unfortunately the same protections or flexibility have not been extended to their commercial counterparts. Landlords are expected to make allowances for the rent arrears from these specific periods of closure due to the pandemic, and share the financial impact with their tenants."
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