The government has extended a ban on commercial evictions until March 2022, in a move that marks a blow for retail landlords but welcome news for high street tenants.
Existing measures in place will run to March 25. The government said 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”.
The government had faced some calls for the moratorium on evictions, finishing at the end of the month, to be extended. Many hospitality firms are under more pressure now after the planned June 21 easing of lockdown plan was delayed.
It is estimated there is some £6 billion of unpaid rent bills since the start of the pandemic, although part of that has already been written off by landlords.
Communities Secretary Robert Jenrick has announced that legislation will be introduced to ringfence outstanding unpaid rent that has built up when a business has had to remain closed during the pandemic.
Landlords are expected to make allowances for the ringfenced rent arrears from these specific periods of closure due to the pandemic, and share the financial impact with their tenants.
The government pointed to tenants and property owners working together on agreements, including potentially by waiving some of the amount owed, or coming up with longer term repayment plans.
In addition, the government said it is making it clear that businesses who are able to pay rent, must do so. Tenants should start paying their rent as soon as restrictions change, and they are given the green light to open.
The latest extension had been tipped in reports, including in The Telegraph, and a number of chief executives this morning told the Evening Standard the move would be either welcomed, or in some cases viewed as not helpful.
Confirmation of the extension came this afternoon.
Kate Nicholls, UKHospitality’s chief executive said: “These measures are wholly welcome and will banish a grim shadow that has hung menacingly over hospitality since the Covid crisis began 15 months ago. The legislation will form a strong bedrock for negotiated and fair settlements that can help heal the damage that the pandemic has wrought.”
The British Independent Retailers Association’s Andrew Goodacre, said: “Perfectly viable independent retail businesses that have suffered months of lockdown need time to recover.”
The British Retail Consortium’s leader Helen Dickinson said the update addressed “an issue of vital importance in the nick of time”.
But Danielle Drummond-Brassington, a real estate disputes partner at law firm CMS, said: “Nothing is done here to address or recognise the financial pressure landlords are facing, or that there are tenants out there who can pay but have been taking advantage of the government’s measures.”
In some cases landlords say some occupiers refusing to pay rent are big, profitable companies.
Extending the evictions ban will not solve the problems that retailers are currently facing today
Scott Parsons at Unibail-Rodamco-Westfield
Melanie Leech, chief executive of the British Property Federation said: “The property industry itself proposed this idea of ringfencing rent arrears for the most vulnerable tenants hardest hit by Covid-19 – to provide more time for these tenants and their property owners to reach agreement, where they have not already done so, on rent debt built up during the pandemic.”
The BPF boss thinks the blanket extension to the moratoriums will provide “further opportunity for those 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”.
Scott Parsons, UK COO for Unibail-Rodamco-Westfield, which is behind the Westfield shopping centres, said: “Extending the evictions ban will not solve the problems that retailers are currently facing today. In my view, the most effective way that Government can support occupiers is to urgently reform the business rates system which is the single most important issue facing the industry.”
Charles Begley, executive director of London Property Alliance, which works with the real estate sector in the City and West End, said: “We understand the Government’s good intentions to support businesses following the delays to the Covid response roadmap, but now is the time for Government to extend similar assistance to property owners, many of which could fail without some form of debt relief. Equally, well capitalised businesses which can pay should be required to do so, so that owners can work flexibly and constructively with occupiers to ensure they can remain trading and successful in the long term.”
Representatives from the property, retail and hospitality sectors, had recently come up with suggestions in response to the government’s call for evidence on the best way to withdraw or replace measures that have helped high street firms ride out the virus crisis.
The new extension applies to all firms, but the new measures that will be introduced by primary legislation will only cover those impacted by closures.