Commercial consultation on rent arrears
- Published: Tuesday 13 April, 2021
- By: Commercial Trust
Commercial landlords have been urged by the government to share vital information on their experiences of pandemic-induced rent arrears.
They are looking to understand how landlords and tenants are responding to the situation and are seeking to use the information to shape future policy making.
Are tenants purposefully avoiding paying rent?
Due to businesses having to close for large periods of the last 12 months, the ministry is hoping to assess the risk posed by remaining commercial rental arrears.
During the pandemic, the government has provided financial support to those businesses unable to operate or operating at less than 100%.
On top of this, there was also the introduction of the “Lease Forfeiture Moratorium” legislation, preventing landlords of commercial properties from being able to evict tenants for not paying rent.
These temporary measures are currently in place until the 30th of June 2021.
The consultation discusses the implications that some tenants are avoiding paying rent on purpose:
“We are aware of concerns that some tenants who could pay rent are refusing to do so, and of the potential impact of this on the commercial landlord and investment sectors; and on specific sectors who receive much of their income via rent including the ports sector.”
Support by sector
The call for evidence sets out a range of options, ranging from voting to allow protective measures to lapse up to a high level of support including legislation.
One sector that has been especially hard-hit by Covid-19 is that of hospitality.
Kate Nicholls, chief executive of trade body UK Hospitality commented:
“It is very positive that Government has finally appreciated the need to consider additional measures in the commercial lease market,"
“After a year of lockdown and restrictions rent debt in the hospitality sector has topped £2 billion and businesses still face months without being able to trade profitably. This level of debt simply cannot be paid off in the short-term.”
“There must be sustained and targeted support to allow tenants and landlords to reach an agreement. This must include measures from landlords to write off a level of Covid-related debt”
The views gathered will shape government policy and help it plan a “carefully managed exit” to preserve tenant businesses and the jobs they support.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.