In a move to support struggling businesses amid the ongoing pandemic, the UK government has extended the eviction ban until March 2022. Originally set to expire at the end of June, the moratorium provides relief for commercial tenants who have been unable to pay rent due to the economic impacts of Covid-19. Alongside the eviction ban, restrictions on landlords using laws that allow them to recover rent arrears by selling a tenant’s goods will also be extended.
The decision to extend the moratorium comes just days after Prime Minister Boris Johnson extended the current lockdown restrictions to July 19. Steve Barclay, the Chief Secretary to the Treasury, announced the extension during a statement on the economy in the House of Commons. He reassured struggling tenants that existing debts accumulated during the crisis would be protected and established a new arbitration mechanism to help resolve disputes over these arrears between tenants and landlords.
The extension of the eviction ban has been met with mixed reactions. Retail and hospitality industry groups warn that the two sectors have accumulated £5 billion in rent arrears, with many businesses still operating well below pre-pandemic levels. These groups believe that the extension provides necessary relief for businesses that have been severely impacted by ongoing restrictions. However, some landlords express concerns that the moratorium has allowed profitable businesses to avoid paying rent.
Barclay acknowledged the importance of jobs in these affected businesses and stated that the government is seeking further evidence on actions to resolve these debts. The government plans to introduce legislation to support the “orderly resolution” of Covid-19-related debts resulting from business closures. Until this legislation is in place, the existing measures, including the extension of the eviction moratorium, will remain in effect. The government aims to establish a backstop that allows for binding arbitration when negotiations between tenants and landlords fail.
Despite the government’s efforts to provide relief, Shelley Sandzer, a partner at Duncan Lillie professional services, expressed concerns over the extension of the moratorium until March 2022. Sandzer believes that this decision merely postpones the problem and worsens the situation for landlords and operators who have yet to reach an agreement. She highlights the need for meaningful discussions between landlords and tenants, stressing that collaboration, cooperation, and communication are key to achieving balanced outcomes that benefit all parties involved.
Useful Links:
1. Government Guidance on Working Safely During Covid-19
2. Government Plan to Help Businesses Resolve Covid-Related Debt
