12 months ago, the UK government introduced a temporary ban on forfeiture from commercial premises (amongst other prohibitions relating to rent arrears). That ban has now been extended to 30 June 2021 and could possibly be extended further.
For more information on the changes in Scotland, please see our blog here.
There are, however, still options available to landlords to recover tenant arrears. For more information about that process please see our previous blog.
The most recent moratorium was due to end on 31 March 2021. When announced on 9 December 2020, this was said to be a 'final extension'. So, this recent extension has been met with a bit of bewilderment by commercial landlords. The legitimate question being asked is – what is the end game?
Recognising this concern and the fact that, in theory, commercial tenants have been under no risk to their occupation by not paying rent over the past year, the government has launched a call for evidence on commercial rents, to set out steps to be taken after 30 June. Steps proposed range from a 'phased withdrawal of current protections', to legislative options 'targeted at those businesses most impacted by COVID-19'.
There is also said to be a review of commercial landlord and tenant legislation later in 2021 under which the 1954 Act will be in consideration, different models of rent payment and the impact of Coronavirus on the market. We await to see what that might look like, but it is clear government is concerned about what the high street needs to flourish in the future, following the gobbling-up of high street brands by online retailers during the pandemic.
The government notes there is a significant risk to jobs if discussions between landlord and tenants about paying rent or writing it off, are not fruitful by the time the ban ends. The government has advised it is prepared to take further steps to mitigate that impact. After 12 months, it is reasonable to expect that the risk to jobs is one which will be troubling both landlords and tenants alike.
All stakeholders are encouraged to provide evidence. More information can be found by clicking here.
If you have any concerns or questions about the temporary ban or recovering tenant arrears and how it may impact you or your business, please do not hesitate to get in touch with our real estate disputes team or your usual Brodies' contact.