COVID-19 and Commercial Rents - what will happen after 30 June? The UK Government calls for evidence

The UK Government this week launched a call for evidence from all participants in the commercial property industry, as the measures it introduced last year to protect commercial tenants from eviction for non-payment of rent are scheduled to end on 30 June 2021.

The measures under scope are the property-specific moratorium on commercial lease evictions (s82 of the Coronavirus Act 2020) and the restriction on landlord’s use of Commercial Rent Arrears Recovery (CRAR) (The Taking Control of Goods (Amendment) (Coronavirus) Regulations 2021).

In addition, these measures are complemented by the restrictions on the use of winding-up petitions and statutory demands established by 41(1)(b) of the Corporate Insolvency and Governance Act 2020 which applies economy-wide. The content of these restrictions are not part of this consultation, but the length of time they should be in place - and how they relate to the other measures - is. The use of CVAs - which is being monitored separately - and the wider review of landlord and tenant legislation announced by the Government last November are excluded from this survey.

The Government has stated that the evidence provided will be used by them to work out whether a balanced and phased withdrawal - or a replacement of measures – is required, given the concerns about the potential negative impact on tenant businesses being able to bounce-back post lockdown, with outstanding rent arrears.

Under particular scope here is understanding how well - or otherwise - the voluntary Code of Practice for the commercial property sector introduced last June, is being used by landlords and tenants to adjust existing lease terms to “reflect the time-frame of recovery commercial tenants will need”. The announcement refers to concerns about tenants not paying rent when they have the means to do so - and the knock-on effect for commercial landlords and investors - but it also refers to hearing about landlords refusing to talk or negotiate with their tenants on outstanding rent arrears. New guidance, to be read alongside the Code of Practice, is promised shortly.

Although open to all in the commercial property industry, the Government has said it is particularly keen to hear from SME’s such as small commercial landlords, independent businesses and sole traders with leased premises.

A link to Government survey can be found here. The survey closes on 4 May 2021.