Commercial evictions ban extended

In the wake of the final stages of Covid restrictions easing being pushed back, the Government has announced that the ban on commercial evictions will be extended into 2022. While some landlords agree that it protects the vulnerable, others are concerned about tenants abusing the ability to not pay.;
Commercial

The UK Government has announced that the eviction ban on commercial tenants, which was due to finish at the end of the month, has been extended.

The new date, some nine months later, is now March 25th 2022.

Freedom day

The rationale behind moving the end of the eviction ban appears to be in the wake of the decision to push back the final stage of lockdown restrictions lifting.

This so-called “freedom day” is now planned for the 19th of July 2021, not the 21st of June as previously thought.

According to treasury secretary Stephen Barclay, the delay in easing restrictions “present additional challenges” to business.

When addressing MPs on Wednesday the 16th of June 2021 he said:

“We will introduce legislation in this parliament session to establish a backstop so that where commercial negotiations between tenants and landlords are not successful, they go into binding arbitration.

“Until that legislation is on the statute book existent measures will stay in place, including extending the existing moratorium in place to protect tenants from eviction to March 2022.

“All tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord.”

The moratorium, announced in April 2020, was initially designed to help businesses that had to close during lockdowns up to September 2020.

Landlords are expressing their disappointment at it being extended once again, warning that while some businesses need this safety net, other tenants are abusing the ban to avoid paying rent they can afford.

Mandatory mediation

The second piece of news from this announcement is the introduction of a binding arbitration system.

Business secretary Kwasi Kwarteng commented:

“The new arbitration process will be underpinned by law, providing commercial tenants and landlords with peace of mind that Covid-related rent debts will be settled fairly, and with finality.”

It is not clear, at present, if the government also plans to introduce a compulsory mediation process to settle disputes, between landlords and tenants, in the residential sector.

One national newspaper suggested earlier this week that compulsory mediation was in the future for all Covid-related rent arrears cases.

Landlord response

Melanie Leech, the chief executive of the British Property Federation said:

“The legislation required to focus protection on the most vulnerable and to create a clear exit path to deal with rent arrears should have bene put in place for the end of this month.

"The government has failed to recognise that commercial property owners are essential to the health of our town centres - to creating economic growth, jobs and opportunity.

“The blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support and will cast a long shadow over future investment to build back better.”

Whilst most landlords have come to an agreement with their tenants in terms of rent, and millions of pounds has been given to the most vulnerable tenants, support for landlords remains thin on the ground.

Many are concerned that they will never recover the unpaid arrears, and that there will be no support for landlords when this next extension comes to an end.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.