High street shops and other companies under strain will be protected from aggressive rent collection and asked to pay what they can during the coronavirus pandemic, the Business Secretary has set out.
According to the government, the majority of landlords and tenants are working well together to reach agreements on debt obligations, but some landlords have been putting tenants under undue pressure by using aggressive debt recovery tactics.
To stop these unfair practices, the government will temporarily ban the use of statutory demands and winding up orders where a company cannot pay their bills due to coronavirus, to ensure they do not fall into deeper financial strain. The measures will be included in the Corporate Insolvency and Governance Bill, which the Business Secretary Alok Sharma set out earlier this month.
Property and litigation solicitor at Morecrofts, Derek Dawson said: “This is welcome news from the government. It’s important now more than ever to protect our high street, particularly the more vulnerable small businesses.
“In months to come, as the economy begins the path to recovery, how landlords have acted towards tenants will go a long way.”
Government is also laying secondary 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 hope is that this will further safeguard the high street and millions of jobs by helping to protect them from permanent closure during this time. However, while landlords are urged to give their tenants the breathing space needed, the government calls on tenants to pay rent where they can afford it or what they can in recognition of the strains felt by commercial landlords too.
Longer strategy needed
Derek added: “I am interested to see what pragmatic approach the government take towards supporting businesses following the current pandemic. With so much to digest and so many business models with property rent to pay, it is crucial that local and national government plan and implement long term action. The 90 day moratorium is welcome but may only be a sticking plaster and a longer strategy will need to be developed.”
More information is available on the government’s support and guidance for businesses affected by coronavirus.