Commercial landlords face extended restrictions

18 Jun 2021

Commercial landlords are being asked to shoulder an even greater ‘pandemic’ burden with the Government announcing that the breathing space provided to business tenants in March last year will be extended by a further nine months.
 
The Government has announced its intention to:
  1. Extend the ban on forfeiture of business tenancies for non-payment of rent until after 25 March 2022;
  2. Extend the restrictions on the use of Commercial Recovery Arrears Recovery (CRAR) until after 25 March 2022;
  3. Extend the restrictions on statutory demands and winding up petitions until after 30 September 2021; and
  4.  Introduce a new Act of Parliament to deal with the accrued rent arrears of businesses that had to shut during the pandemic.
’Forfeiture’ enables a landlord to take steps to terminate a tenancy where a tenant has defaulted on its obligations under a lease. In the case of rent arrears, landlords have had their hands tied since March 2020, and this looks set to continue for some time. Great news for business tenants, and particularly welcomed by the hospitality and retail sectors, but not so good for landlords who are missing out on a vital income stream.
 
The Government’s press release states that:
 
“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.”
 
Whilst the inference that the extension to restrictions will be for sector specific industries that have been hit the hardest (eg. hospitality), in practice the restrictions will continue to apply to all businesses and all industries.
 
A landlord’s use of CRAR has also been curtailed since March 2020 and this looks set to continue also with the restrictions currently providing that:
  • if a notice of enforcement is given, or where goods are taken control of, on or before the 23 June 2021, then 457 days' rent must be in arrears;
  • if a notice of enforcement is given, or where goods are taken control of, on or after 24 June 2021, then 554 day's rent must be in arrears.
In terms of the new legislation announced designed to “ringfence” arrears, there is a clear expectation from the Government that landlords "share the financial impact" of the pandemic with their tenants. To do this, we understand that the new legislation will be designed to help parties to come to an agreement regarding arrears through a "binding arbitration process". 
 
We are still awaiting further detail on this and some important questions remain:
  • When will this come into force?
  • What exactly does “ringfence” mean? How far does it extend?
  • Will protection only be contained to certain sectors as suggested in the press release?
  • What are the proposed arbitration guidelines?

Finally, it has also been announced that further changes are on the way, with the expected review of commercial landlord and tenant legislation later this year - including consideration of issues under the Landlord and Tenant Act 1954 and different models of rent payment. Landlords may feel understandably nervous about the outcome of this review - especially given the drastic changes being proposed to the residential tenancy sector.
 
Many in the industry will be forgiven for feeling that they have more than enough to contend with at present.
 

Further reading

Business and divorce: what to know if going into business with your spouse

Blog
30/01/2023
When going into business with a spouse, you do so without expecting to divorce. However, it is wise to consider this from the outset and plan for it, just in case
Read more Read

Pre-Nuptial Agreements: Part 1 – to have or not to have?

Blog
27/01/2023
Should you get a Pre-Nuptial Agreement? Nigel Winter discusses the answer to this question in the first of a series of blogs on the subject
Read more Read

US Attorney General Merrick Garland files Anti-Trust Suit against Google

Blog
25/01/2023
The tech giant is accused of buying up competitors. Google has stated that it does not hold a monopoly in the relevant market
Read more Read

DMH Stallard advises CGR on the acquisition of John Binns & Sons Ltd

Blog, News & PR
25/01/2023
“JB Springs is a fantastic opportunity for CGR to establish a first base in the UK. DMH Stallard played a key role helping us to close the deal.”
Read more Read
  • Brighton - Jubilee St

    1 Jubilee Street

    Brighton

    East Sussex

    BN1 1GE

  • Brighton - Old Steine

    47 Old Steine

    Brighton

    East Sussex

    BN1 1NW

  • Gatwick

    Griffin House

    135 High Street

    Crawley

    West Sussex

    RH10 1DQ

  • Guildford

    Wonersh House

    The Guildway

    Old Portsmouth Road

    Guildford

    Surrey

    GU3 1LR

  • Hassocks

    32 Keymer Road

    Hassocks

    West Sussex

    BN6 8AL

  • Horsham

    Ridgeland House

    15 Carfax

    Horsham

    West Sussex

    RH12 1DY

  • London

    6 New Street Square

    New Fetter Lane

    London

    EC4A 3BF

  • Make an enquiry

    Make an enquiry

    Message

    Or head to our Contact us page