Commercial Rent Collection and Covid-19: Government’s call for evidence on exit strategy from pandemic emergency measures

The temporary restrictions on landlords’ rights to take action against their commercial tenants for non-payment of rents, imposed due to the COVID-19 pandemic, are due to expire on 30 June 2021.

These emergency measures responded to the significant periods of disruption to revenue and business brought about by the pandemic. The relief offered by the restrictions was never intended to be permanent; and we have now reached the crucial stage where a transition out of the measures must be formulated. Self-evidently, a careful and appropriate exit is paramount on both sides of the equation; and for the wider economy.

The Ministry of Housing Communities and Local Government has opened a call for evidence to support the Government’s decision-making process – stakeholders are keenly encouraged to respond by 4 May 2021.

At this stage, the focus is on commercial evictions (including forfeiture) and the use of CRAR (rent arrears recovery).

This review focuses on how landlords and tenants are dealing with rent debts currently and how the Government might act now to best promote economic recovery. The call for evidence does not currently seek responses on the use of statutory demands and winding up petitions, nor the use of CVAs. A wider long-term review of the commercial property industry will follow, according to a Government press release.

The withdrawal from these measures is highly likely to be gradual rather than immediate. However, the more engaged landlords and tenants have been (and continue to be) in relation to rent arrears, the less that additional government intervention may be required.

Possible options to be considered by the Government include:

• Allowing the restrictions to simply expire on 30 June 2021;
• Allowing the moratorium on commercial lease forfeiture to lapse on 30 June 2021 but retaining the insolvency measures and additional rent arrears amendments to CRAR for a period of time;
• Targeting existing measures to businesses based on the impact that COVID restrictions have had on their businesses for a limited period of time; and
• Encouraging increased formal mediation between landlords and tenants; non-binding adjudication between landlords and tenants; and/or binding non-judicial adjudication between landlords and tenants.

We are entering a vital phase with respect to the landlord and tenant dynamic (in light of the effect of the pandemic and recovery from it). It is important that, when considering the above options, the Government has as full an evidence base as possible from which to base further policy and/or legislation.

The views of businesses, business representative organisations, commercial landlords, lenders, investors and their representative organisations; commercial property professionals; and anyone with an interest in or connection to the commercial property market in England are sought.

The government is particularly interested in the views of small to medium sized businesses (SMEs) including small commercial landlords, independent businesses, and sole traders with leased premises.

The deadline for responding to the call for evidence survey is 4 May 2021. The survey may be accessed here.