Govt intervenes to stop ‘aggressive’ rent recovery

The Government has introduced temporary measures to protect UK high streets from the economic effects of the pandemic, including preventing landlords from taking legal action to collect rent.

Among the measures announced by business secretary Alok Sharma on Thursday are the temporarily voiding of statutory demands and winding up petitions issued to commercial tenants, and a general request to landlords to stop otherwise unfair or aggressive forms of debt collection from struggling occupiers.

In particular, ministers are drawing up secondary legislation to give tenants with more breathing space to pay rent, by preventing landlords using Commercial Rent Arrears Recovery Act unless they are owed 90 days of unpaid rent.

The measures will be included in the Corporate Insolvency and Governance Bill, which is being enacted specifically to help business cope with the strains of operating amid the coronavirus outbreak.

The majority of landlords and tenants are working together to reach agreements on debt obligations, but some landlords have been putting tenants under undue pressure, Sharma said in a statement.

“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,” he said.

“I know that like all businesses, [landlords] are under pressure, but I would urge them to show forbearance to their tenants…while the Covid-19 emergency continues.”

Sharma’s “swift action will give retailers some vital relief and help safeguard millions of jobs across the country”, said Helen Dickinson, chief executive of the British Retail Consortium.

“Rents are a huge burden for retailers that must be paid even where shops are closed,” she added. “[Today’s measures] protect firms who, during these extraordinary times, are unable to meet their rent obligations.”

The property industry welcomed the announcement but called for further relief and funding from banks and others for certain sectors of commercial real estate, such as leisure and hospitality, which are unable to trade at present.

“The main question is how we will resolve the issue of non-payment of rent in an environment where little turnover is being generated and the profound future impact this has on both landlords and tenants,” said Dan Simms, co-head of retail at Colliers International.

“This is too large a problem to be left ongoing with no clear and effective Government intervention.”

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