Eviction protection for businesses in need extended (again!)

The existing measures in place to protect commercial tenants from eviction, as discussed here, have been further extended by the Government as announced on 16 June 2021.

Those further extensions, which are now due to expire on 25 March 2022, have been introduced to protect those businesses, particularly nightclubs and other hospitality businesses, that have been forced to remain closed during the pandemic and that still remain affected by the delay of the Government's plans to lift the last of the COVID-19 restrictions.

The new legislation is yet to be published, but it would appear that under the new rules landlords are expected to work closely with their tenants to try to come to an agreement on how to manage any monies owed.  The Treasury Secretary, Mr Stephen Barclay, is quoted as saying “…all tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord as soon as restrictions are removed on their sector if they are not already doing so.”

In case the parties are unable to come to an agreement, the legislation will also introduce a binding arbitration process which, if used, will require the parties to enter into a formal binding agreement  that must be adhered to.

Whilst these further extensions will be enthusiastically be welcomed by tenants, it is likely the enthusiasm will not be shared by landlords across the country.

In addition, under the new extended restrictions:

• Statutory demands and winding up petitions will remain restricted for a further three months and
• The use of the Commercial Rent Arrears Recovery (CRAR) process by landlords will also be extended.

However, it must be considered whether these measures will simply delay the inevitable, such as a potential wave of insolvencies and forfeitures that may follow the expiry of the extended deadline, or if they will in fact be a valuable tool to help businesses get back on their feet once the Covid-19 restrictions are finally over in order to kickstart the economy.

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.