Car retailers left with rent arrears after COVID-19 stalled trading have been granted a nine-month reprieve from possible eviction.
The UK Government’s Treasury chief secretary Steve Barclay told the House of Commons yesterday (June 16) that the ban on commercial property evictions which was due to end on June 30 has now been extended to March 25 next year.
Barclay asserted that tenants should be paying their rent as long as they are allowed to trade, however.
“To be clear, all tenants should start to pay rent again in accordance with the terms of their lease, or as otherwise agreed with their landlord, as soon as restrictions are removed on their sector if they are not already doing so,” he said.
Communities Secretary Robert Jenrick said the legislation would ringfence outstanding unpaid rent that has built up when a business has had to remain closed during the COVID-19 pandemic.
Government said that the new ruling on commercial evictions had been implemented to help businesses unable to open during the COVID-19 pandemic – such as nightclubs and other hospitality businesses – the help they need to recover from the pandemic.
It added: “The legislation will help tenants and landlords work together to come to an agreement on how to handle the money owed – this could be done by waiving some of the total amount or agreeing a longer-term repayment plan.
“This agreement should be between the tenant and landlord and, if in some cases, 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.”
Alongside Government’s postponement of possible commercial evictions, The Ministry of Justice has confirmed that the restriction on the use of the Commercial Rent Arrears Recovery (CRAR) process by landlords will also be extended.
The total number of days’ outstanding rent required for CRAR remaining at 554 days.
Estimations suggest that UK rent arrears of more than £6 billion and, while many welcome the Government’s ongoing efforts to protect businesses, tension is increasing among landlords.
Speaking to the Evening Standard newspaper, 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.”
Scott Parsons, UK chief operating officer for Unibail-Rodamco-Westfield, which is behind the Westfield shopping centres, meanwhile, suggested that urgent reform the business rates system was “the single most important issue facing the industry”.