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Extension to ban on evictions for commercial tenants

Extension to ban on evictions for commercial tenants

When will the ban on commercial evictions end?

The government announced this week that the ban on business evictions will be extended until March 31st 2021.

It will mean that the eviction moratorium, first announced in March this year, will have been in place for over a year. The ban on evicting commercial tenants had already been extended twice, however the announcement indicated that this will be the final extension.

The ban was originally announced to help businesses hardest hit by the consequences of COVID restrictions.  It prevents landlords from pursuing tenants for unpaid rent by legal means or evicting them.

What does the commercial evictions ban extension mean for tenants?

The government’s website explains that:

“The majority of commercial landlords have shown flexibility, understanding and commitment to protect businesses during an exceptionally challenging time.

This final extension to protections from the threat of eviction will give landlords and tenants 3 months to come to an agreement on unpaid rent. The government is clear that where businesses can pay any or all of their rent, they should do so.”

Commercial Landlords and rent arrears

Businesses have been hard hit by the pandemic. Retail and hospitality have been particularly affected. Commercial landlords, consequently, have also born a heavy burden.

Many businesses are enacting break clauses in their leases, or assigning their commercial leases to someone else, as their businesses have struggled.

We also saw Clarks shoes move to turnover rents for a number of their stores as part of a CVA last week, something Frettens Solicitors' Insolvency guru Malcolm Niekirk wrote about recently and envisages being an emerging theme in 2021.

Landlords are in a very difficult position and will still be once the ban is eventually lifted next year. With the high street struggling and increased economic uncertainty, they may be forced to choose between negotiating on rent arrears, or having a commercial property sitting empty for a long period.

Commercial rent payments under the ban

As with the ban on residential evictions, the policy has proved controversial and has attracted criticism from both landlords and tenants.

On announcing the extension, communities secretary Robert Jenrick said:

“This support is for the businesses struggling the most during the pandemic, such as those in hospitality; however, those that are able to pay their rent should do so.”

Advice for commercial property landlord and tenants

We have been through an unprecedented and difficult year, and the next twelve months looks set to be equally as difficult, as businesses look to recover.

Commercial Landlords and tenants are going to have to work together to find ways to get through. That being said, it has unfortunately become obvious that some businesses are using this as an excuse not to pay, and that there will be a substantial number of landlords out of pocket come summer 2021.

Free initial appointment for all new clients

If you would like to speak with one of our team about how we can help, we offer a free initial appointment for all new clients. We advise commercial landlords and tenants on the following:

  • lease amendments
  • lease reassignments
  • turnover rents
  • debt collection
  • evictions
  • insolvency