Under new measures by the Government tenants are being given further protection. In addition to the current moratorium on forfeiture it was announced that any winding-up petition that claims that the company is unable to pay its debts must first be reviewed by the court to determine why. The law will not permit petitions to be presented, or winding-up orders made, where the company’s inability to pay is the result of COVID-19.
This 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. There will also be legislation to prevent landlords using commercial rent arrears recovery (CRAR) unless 90 days or more of unpaid rent is owed.
These new provisions were seen by some as almost inevitable as landlords had to look to other forms of relief following the loss of the right to forfeiture.
The hope of the Government appears to be that landlords and tenants will work together to reach agreement during the present crisis.
The aim is to temporarily stop landlords from using statutory demands and winding up orders where the tenant company cannot pay their bills due to coronavirus.
There is also to be legislation to 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.
The position of the Government is that commercial tenants need to be protected to safeguard jobs but it also recognises that landlords are also feeling financial pressure and therefore tenants need to pay rent where they can afford to.
Business Secretary, Alok Sharma, said:
In this exceptional time for the UK, it is vital that we ensure businesses are kept afloat so that they can continue to provide the jobs our economy needs beyond the coronavirus pandemic.
Our unprecedented package of support can help commercial landlords, including through the recent expansion of the Coronavirus Business Interruption Loans Scheme.
I know that like all businesses they 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.
Communities Secretary, Robert Jenrick, said:
During this period of significant disruption, we are doing everything we can to ensure that commercial tenants are as well placed as possible to get back to business from the pandemic.
We understand that landlords are facing their own very serious pressures and are concerned about their position with lenders. We are working with banks and investors to seek ways to address these issues and guide the whole sector through the pandemic.
What does seem certain now though is that when we emerge from the current pandemic there may well have to be further measures take to avoid a surge in forfeiture and other action by landlords.
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