Commercial Property Rent Arrears 2021

With the existing prohibitions on forfeiture, CRAR proceedings and winding-up petitions end on 30 June 2021, the Government have launched a consultation for commercial property stakeholders, on their views and options on how rent arrears should be addressed and dealt with.

There is clearly a huge risk to businesses and jobs (and the wider economy with a potential of an increase of empty properties) if Landlords and Tenants do not achieve any agreements on how to manage rent arrears and other associated debts.

The Government is asking Commercial landlords and Commercial Tenants and others with a commercial property or business interest, in England to take part in a survey to allow them to get a better understanding of:

  1. Negotiation of rent and repayments.
  2. The impact from the moratorium on forfeiture.
  3. Restrictions on the ability to present a winding up petition.
  4. Exit strategies from the current temporary measure.

The survey will enable the Government to obtain the opinions of business owners and the impact on businesses of six possible options:

  1. Allowing the current protective measures to expire on 30 June 2021.
  2. Allowing the moratorium on commercial lease forfeiture to lapse on 30 June 2021 but retain the insolvency measures and additional rent arrears amendments to CRAR for a period.
  3. Targeting existing measures to Tenants, based on the impact that COVID-19 restrictions have had on their businesses for a limited period.
  4. Encourage increased formal mediation between Landlords and Tenants.
  5. Adjudication between Landlords and Tenants
  6. Binding non-judicial adjudication between Landlords and Tenants

The online survey can be taken by clicking on the following link:

https://consult.communities.gov.uk/urban-policy/commercial-rents-and-covid-19-call-for-evidence/

or by searching “Commercial Rents and Covid-19 Call for Evidence”

Steps for Landlords and Tenants

Tenants still legally owe the rent and are encouraged to “pay some or all of their rent” if they can and Landlords are encouraged to with struggling Tenants where they are able to do so. 

The Government has made it clear they will not provide any financial assistance to cover commercial rent arrears. Therefore, they are encouraging Landlord and Tenant’s to work together to reach agreements.

The Government intends to issue further guidance which will provide a template for Tenants to describe the impact that the pandemic has had on their business and to make an offer to their Landlords in respect of arrears and ongoing lease terms. Landlords can also use the template to respond to the Tenants’ offer (which they will be requested to do in a constructive way).

If attempts to negotiate and agree terms in respect of unpaid rent and lease terms do not take have a positive resolution, then the Government proposes to take further action, which (depending on the response to the survey) is likely to see the Government adopt one of options one to six listed above.

In light of the Government’s move with this consultation and its confirmation it will not provide any financial support for Commercial Rent arrears, if you would like advice on these points or any other Property matters, please contact Mohammed Rahman at Borneo Martell Turner Coulston Solicitors [email protected]  or one of the other members of the Commercial Team on 01604 622101.