UK Government Acts to Protect Retail and Business Tenants

On 23 April, the Government announced that it was introducing new measures to protect the UK’s Retail and Business Tenants.

These measures were said to be designed to protect tenants from aggressive rent collection by landlords where they are unable to pay their rent because of Covid-19.

These steps effectively prevent landlords from using Statutory Demands and Winding up Petitions for collecting rent from tenants of commercial property.

Although these preventative measures are not yet in force, the Government has said that they will act retrospectively and ban action taken on statutory demands issued between 1 March and 30 June. Similarly, the ban on the issue of winding up petitions will run from 27 April to 30 June.

These measures follow the Government’s earlier temporary ban – which continues – on the use of forfeiture proceedings as a remedy for landlords, and the introduction on 25 April of a ban on the use of the Commercial Rent Arrears Recovery procedure via bailiffs  (unless arrears are over 90 days).

There remain some uncertainties:  will the legislation, for example, prevent action against guarantors – and what about rent deposits and action to top them up?

Landlords may very well be asking what about them?  These restrictions protect “can’t pay” and “won’t pay” tenants alike, and heap the entire burden on Landlords – who will in many cases remain liable for the provision of services as well, of course, as being obliged to meet their own ongoing costs without support.

We have already seen some Landlords coming under pressure from Tenants to agree longer term re-negotiation of lease liabilities and Landlords need to consider very carefully and take advice before agreeing such concessions.