The government has extended protection from eviction for retailers over unpaid rent for another three months, lasting until the end of September.
The Ministry of Housing, Communities & Local Government has also published a new ‘code of practice’, intended to guide negotiations between retailers and landlords.
A three-month ban on evictions of commercial tenants for non-rent payment was first introduced in March and was set to last until 30 June. Landlords had been urging ministers not to extend it, while retail chiefs had argued more time was essential to save retailers that had lost turnover during lockdown.
Along with the eviction ban, the government has also extended other temporary protections for commercial tenants for a further three months, ending 30 September. They include a ban on landlords using winding-up orders or statutory demands against businesses over unpaid rent.
The code of practice prompted diverging responses from landlord and retail sources when it was first announced in May. Landlords took it as a sign of ministers shifting the burden of debt back to retailers, while retail sources questioned what it could achieve where businesses simply didn’t have the money to pay after months of closure.
As expected, the code is voluntary, today’s government announcement confirmed. It “encourages tenants to continue to pay their rent in full if they are in a position to do so and advises that others should pay what they can, while acknowledging that landlords should provide support to businesses if they too are able to do so”, the announcement said.
It has been developed with industry bodies including the BRC, British Property Foundation and UKHospitality.
“As our high streets come to life and our town centres open for business, it is crucial that both landlords and tenants have clarity and reassurance as they seek to keep their finances stable and bounce back,” said communities secretary Robert Jenrick.
“That is why we are extending measures to protect those who are unable to pay rent from eviction so that businesses have the security they need to plan for their futures.
“And in recognition of the strain that the virus has had on our high streets, our new code, backed by leaders across the industry, will help unlock conversations on rent and future payments whilst ensuring best practice is displayed across the board as we confront the challenges of this pandemic.”
Read more: Can property code of practice prevent ‘cliff edge’ collapses?
Business secretary Alok Sharma said: “By putting a stop to unreasonable evictions, these measures will protect jobs and provide further flexibility to our high street businesses that were trading successfully before the Covid-19 emergency, so they can focus on continuing to deliver for their customers and communities.”
Both landlords and retail chiefs have urged the government to provide a grant scheme to make up the rent shortfall, a call echoed in BRC CEO Helen Dickinson’s response to today’s announcement.
“The ongoing pandemic presents an enormous threat to the survival of thousands of retailers, and the millions of jobs they support,” she said. “The necessary closure of most shops during lockdown has created a gaping hole in many retailers’ finances. This has been exacerbated by continued rent demands on stores around the country, even where most have been closed for business. A solution is needed.
“This code is a first step toward improving the dialogue between retailers and their landlords. An extension to tenant protections against aggressive behaviour from some landlords is essential to underpin it, and we warmly welcome the government’s commitment to this.
“However, all parties should recognise that the code does not provide a solution for those retailers who are simply unable to pay what is being demanded, and we now look forward to continuing our constructive dialogue with government and other parts of the property sector to address these unpayable rents. Without further action, both retailers and landlords remain in a precarious situation that could lead to substantial numbers of redundancies as soon as tenant protections expire.”
BPF CEO Melanie Leech said: “The code of practice published today builds on the many examples of good practice and reinforces the importance of constructive collaboration – not only over the next few months and once the government’s temporary legislative interventions come to an end later this year, but for the long term.”
The government said it would lay a statutory instrument to amend the Coronavirus Act to extend the time period for suspension of the forfeiture of evictions from June 30 to September 30.
Secondary legislation would be laid, extending a ban on landlords using commercial rent arrears recovery for up to 189 days of unpaid rent, also until 30 September.
An amendment had been tabled to the Corporate Insolvency and Governance Bill, extending the temporary ban on statutory demands and winding-up petitions to the same date.
The government said UK Finance had also confirmed its members’ continued support for commercial landlord customers, including amendments to facilities and capital payment holidays.
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