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In line with the Government delaying the easing of lockdown restrictions, it was announced on 16th June 2021 that the ban on evicting commercial tenants for rent arrears has been extended until 25th March 2022. This is primarily to provide further protection for those businesses that are still unable to open under the current restrictions, to allow them sufficient time to recover once they can finally reopen their doors. However, the extension applies to all businesses.

The ban on restricting the right for landlords to forfeit leases for the non-payment of rent was first introduced at the start of the pandemic and has been extended 4 times since. It was anticipated that the ban would come to an end on 30th June 2021, yet the longest extension of 9 months has been announced.

The extension also provides a much needed breathing space for those businesses operating at a reduced capacity due to social distancing, who can instead focus on using their income to pay their staff without the added worry of having to reduce their staff headcount in order to pay rent.

In addition, the Government announced that it will introduce legislation in this session to encourage tenants and landlords to settle rent arrears between themselves by reaching a mutual decision to share the financial impact. This will involve ring fencing any outstanding rent accumulated for the periods when businesses were unable to open during the pandemic. Landlords are expected to make allowances by waving some of the payment or increasing the length of repayment plans.

If an agreement is unable to be reached by the tenant and landlord, a new arbitration process will be put in place to help reach a legally binding formal agreement.

Full details of the new legislation are yet to be announced. It is hoped clarity will be provided to cover situations where businesses were unable to open, such as restaurants, but adapted to provide other services, such as takeaways.

Whilst this may be good news for commercial tenants, it provides a further headache for landlords, many of whom are yet to receive any rent from their commercial tenants since March 2020.

In an attempt to avoid businesses who can pay their rent taking advantage of the extension, the Treasury minister Steve Barclay stressed: “To be clear, all tenants should start to pay rent again in accordance with the terms of their lease, or as otherwise agreed with their landlord, as soon as restrictions are removed on their sector if they are not already doing so. We believe this strikes the right balance between protecting landlords and supporting those business that are most in need.”

If you’re a commercial landlord and would like further advice on your options, speak to a member of our Property Litigation team on 0191 281 6151 or via email at marketing@mincoffs.co.uk.

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