The government has announced extended measures to protect commercial tenants affected by lockdown.

The legislation aims to ringfence outstanding unpaid rent that has built up when a business has had to remain closed during the pandemic. It also aims to guide tenants and landlords to agree repayment plans. If an agreement cannot be made, the law will ensure a binding arbitration process will be put in place so that both parties can come to a formal agreement. This will be a legally binding agreement that both parties must adhere to.

The existing measures in place to protect commercial tenants from eviction will be extended to 25 March 2022. This is to ensure that the sectors who are unable to open have enough time to come to an agreement with their landlord without the threat of eviction.

Statutory demands and winding up petitions will also remain restricted for a further three months to protect companies from creditor enforcement action where their debts relate to the pandemic.

Andy Pear, Partner, BM Advisory, comments: “The cliff edge looming at the end of June has now been deferred once again.  The announcement, which stops landlords taking commercial tenants to court for non-payment and protects tenants from eviction to March 2022, will be welcomed by the retail and hospitality industries, where businesses are estimated to be £5bn in rent debt*.  At the same time it is difficult not to feel sorry for landlords who will have built up significant secured debt that is not being serviced by rental income. The Government seems to be moving towards a position where the burden for rent arrears accrued during successive lockdowns ought to be shared between the landlord and the tenant, if necessary to be agreed by way of a formal arbitration process.  Given the volumes of debt involved this is expected to take considerable time to work through the system and could impact profitability in certain sectors for years to come.

“While the measures will give some immediate respite, it is essential that business owners use this time wisely, by putting plans in place now to restructure or recapitalise their businesses if necessary to ensure they are fit and able to continue when restrictions are lifted.”

For more information and assistance for you and your business, contact Andy Pear or a member of the BM Advisory team.

* BBC – 16 June 2021, Eviction ban on firms behind on rent is extended by nine months