Preventing the enforcement of rent arrears by commercial landlords
With new government measures introduced to safeguard the UK high street, here partner and head of business recovery, Jason Elliott explains the measures taken and how they will assist.
The government has taken steps to introduce temporary new measures to safeguard tenants on the UK high Street against “aggressive” debt recovery actions during the coronavirus pandemic.
Whilst the majority of landlords and tenants are working well together to reach amicable agreements where there are rent arrears, some landlords have implemented the use of “aggressive” debt recovery measures to put tenants under pressure to pay.
In an attempt to prevent this the government has introduced the following:
- A temporary ban on the use of Statutory Demands (made between 1 March 2020 and 30 June 2020)
- Winding Up petitions presented from Monday 27th April 2020 through to 30th June 2020.
The specifics in relation to these measures will be included within the Corporate Insolvency and Governance bill which Business Secretary Alok Sharma set out in April.
There are also plans to introduce secondary legislation to provide tenants with more breathing space to pay rent arrears by preventing landlords using the Commercial Rent Arrears Recovery Rules (CRAR) unless the arrears of rent exceed 90 days.
At present landlords can serve the tenant with a seven day Notice of Enforcement under the CRAR rules to recover unpaid rent which if not rectified entitles landlords to invoke such actions as levying distress over assets owned by the tenant.
The above is all designed around tenants that cannot pay their bills due to coronavirus. What is not yet known is whether these are “blanket” bans or if there will be any tests that the tenant needs to meet to show the specific impact of coronavirus to qualify.
In implementing these temporary measures Mr Sharma hopes to safeguard the UK High Street and millions of jobs. However, the hope is that landlord and tenants can reach amicable agreements which avoid these being needed. Tenants are urged to try to pay rent (in full or in part) where possible.
A further update will be released as and when further details on the proposed secondary legislation is released.
If you would like further information, please contact Jason directly Jason.firstname.lastname@example.org
The information was correct at time of publishing but may now be out of date.