Occupants to be protected from ‘aggressive rent collection’

Restaurant, bar and café businesses will be protected from aggressive rent collection and asked to “pay what they can” during the coronavirus pandemic, the Business Secretary announced today.

The measure comes in response to some landlords who have been putting tenants under undue pressure by using aggressive debt recovery tactics.

The government is temporarily banning the use of statutory demands and winding up orders where a company cannot pay their bills due to coronavirus, to ensure they do not fall into deeper financial strain.

The measures will be included in the Corporate Insolvency and Governance Bill, which the Business Secretary Alok Sharma set out earlier this month.

The Government will also provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

Tenants are still urged to pay rent where they can afford it or what they can, in recognition of the strains felt by commercial landlords.

Business Secretary Alok Sharma, said: “I know that like all businesses [landlords] are under pressure, but I would urge them to show forbearance to their tenants. I am also taking steps to ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the covid-19 emergency continues.

“The temporary emergency measures are designed to acknowledge the pressures landlords are facing while encouraging cooperation in the spirit of fair commercial practice. They also come on top of a substantial package of business support measures, including a moratorium on evictions for commercial tenants for at least a 3-month period.”

UK Hospitality CEO Kate Nicholls, said: “This is a very helpful and pragmatic response from the Secretary of State and will give hospitality businesses some very valuable breathing room.

“Many businesses in our sector have no revenue whatsoever coming in, so paying rents has been out of the question for some. This extra space will allow businesses to survive and to find a way to work with landlords. If social distancing measures are to be in place for some time, as we now believe they will, this measure may need to be extended to ensure that businesses can survive.”

The new legislation to protect tenants will be in force until 30 June, and can be extended in line with the moratorium on commercial lease forfeiture.

Legislation will also be brought forward to prevent landlords using commercial rent arrears recovery (CRAR) unless 90 days or more of unpaid rent is owed.

Jonathan Downey, who has been campaigning for additional support for the industry, said: “It’s not a debt enforcement moratorium (and we still really need that) but it’s great when what we all do can make such a difference.

“They are listening, they are considering, they are responding, it is working.”

Adam Coffer, MD at EPF property, said the policy had not been thought through.

He said: “To the extent that most landlords, myself included, had no intention or desire to issue statutory demands or winding up orders, this didn’t need to be imposed. Tenants who would otherwise have had agreements/concessions from willing landlords will simply not pay. Many such concessions included agreement to waive deferrals entirely. This will now create a huge bottleneck as landlords will have to seek full repayment— worse for tenants. This really hasn’t been thought Over. The banks are still going to want their interest payments with no rent coming in. Also pension funds will not be able to pay out soon if this continues, the government again going in feet first and not thinking about the consequences.”