Extension on rents moratorium

Please see the following announcement from BEIS regarding commercial rents.

Government will announce today that it will extend the moratorium on commercial landlords’ right to forfeiture for the non-payment of rent (Section 82 Coronavirus Act 2020) to 31 December 2020, meaning the moratorium that was due to expire on 30 September 2020 will be extended by three months.

This extension will provide businesses and employees with certainty as they continue to reopen and protect thousands of vital jobs, particularly in the retail and hospitality sectors which were forced to close earlier in the year. This move will help them remain in their premises without the threat of eviction for the rest of this year, giving them the chance to focus on rebuilding their business over the autumn and Christmas period. Full details will be on gov.uk this afternoon and the press notice is here.

As you know, since March, the Government has implemented a range of measures to support commercial tenants and their landlords. The objective of these measures was to preserve tenants’ businesses through the COVID-19 lockdown and to give time and space to landlords and tenants to agree reasonable adjustments to rent and lease terms, including terms for the payment of accumulated rent arrears. These measures included:

• a moratorium on the landlord’s right of forfeiture for non-payment of rent, implemented through the Coronavirus Act 2020;
• restrictions on the service of statutory demands and winding-up petitions, implemented through the Corporate Insolvency and Governance Act 2020;
• an extension of the period of arrears required before Commercial Rent Arrears Recovery (CRAR), which enables landlords to seize goods owned by the tenant in lieu of rent owed, can be invoked, implemented through secondary legislation;
• publishing a voluntary Code of Practice to encourage constructive dialogue between tenants and landlords; and
• working with the financial regulators to issue a joint statement encouraging investors and lenders to consider the issues arising directly from the COVID-19 pandemic in responding to potential breaches of covenants.

Today’s announcement, which includes further amendments to the use of CRAR, ensures that the measures are in place until the end of the year. This applies in England and Wales; Northern Ireland is consulting on its measures and Scotland has separate measures in place until 31 March 2021.

The Corporate Insolvency and Governance Act 2020 included a number of temporary measures that are due to expire 30 September, including the restrictions on statutory demands and winding up petitions and flexibilities around the arrangements for general meetings. Government is considering the need to extend these measures, and will announce a decision on this matter very shortly.

The Code of Practice published in June provides guidance to both parties to ensure that negotiations can progress effectively. This extension is not a rent holiday: rent is still due to landlords according to contractual obligations. We want to see parties where the tenant is unable to pay the full amount negotiate using the principles set out in the Code, which states that those tenants who can pay the full amount of rent should do so; those who cannot should pay what they can; and landlords should provide concessions where they reasonably can. This is a temporary measure being extended; however, and the Government recognises that it cannot go on indefinitely. Government expects both sides of the sector – landlords and tenants - to use this time to negotiate and the Government will intervene further if necessary.

We hope that this news is welcome during what continues to be a challenging time for you all.

Department for Business, Energy and Industrial Strategy