On 10 March 2021 the government confirmed that the evictions ban on commercial tenants for non-payment of rent will be extended until the end of June 2021.
Housing Secretary Robert Jenrick said the decision to extend the ban on evictions for commercial tenants will help those worst affected by the pandemic, such as bars and restaurants, get back to business in May, once doors fully reopen for hospitality.
In an effort to lessen financial pressure on businesses, the government has also extended the restriction on the use of the Commercial Rent Arrears Recovery (CRAR) process by landlords. This measure will increase the total number of days' outstanding rent required for CRAR to be used to:
- 457 days (between 25 March 2021 and 23 June 2021), and
- 554 days (between the 24 June 2021 and 30 June 2021).
How will the business evictions ban extension help tenants?
The extension will provide a much-needed lifeline for those businesses still struggling, particularly those in the hospitality sector, helping them to survive the next few months. With restrictions in place until April at the earliest, many bars and restaurant still face a number of tough months ahead.
However, it is important to stress that this extension will only delay the landlord’s rights; it does not affect a landlord’s right to forfeiture after the June 2021 extension ends. Therefore, where businesses can pay all of their rent, or even part of it, the government is encouraging them to continue to do so.
As a landlord, is there anything I can do?
Many commercial landlords have shown flexibility, understanding and commitment to protect businesses during an exceptionally challenging time. However, it is only a matter of time before this will significantly impact their own cash flow in some cases.
It is important that landlords use upcoming months to assess their position and seek to resolve matter with their tenants. For some this will mean issuing proceedings at court for debt claims. But for many others, continuing to negotiate with their tenants to reach an agreement on unpaid rent may be the most commercial way forward (particularly if the alternative is to force the tenant into an insolvency situation). Either way, landlords would be well advised to grasp the nettle now, as doing nothing is not a helpful strategy. If a negotiated solution is reached, it’s important to remember that:
- any voluntary arrangements, including monthly rent payments or rent holidays, are properly and legally documented to protect both parties;
- new agreed terms are clear and binding and do not prejudice any other lease provisions; and
- the arrangements do not require either a lender or bank consent.
We’re here to help
Our commercial property disputes team can help you through these difficult situations and guide you towards a solution - contact James Fownes, Martin Edwards, Justine Ball or another member of the property disputes team, for advice and support.
From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.
Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.
