Commercial eviction ban will 'banish a grim shadow'

16-Jun-2021 - Last updated on 18-Jun-2021 at 21:39 GMT

Rent debt: the delay in lifting all legal limits on social contact until 19 July "presents additional challenges" for businesses, Treasury secretary Stephen Barclay said. (image: Getty/surangaw)

Related tags Rent Legislation Property

The commercial eviction ban is to be extended by nine months as pubs continue to face mounting rent debt.

Treasury secretary Stephen Barclay has told MPs that the commercial eviction ban will be extended until 25 March 2022.

He said the delay in lifting all legal limits on social contact until 19 July "presents additional challenges" for businesses.

"Existing measures will remain in place, including extending the current moratorium to protect commercial tenants from eviction to 25 March 2022," Barclay said.

Statutory demands and winding up petitions will continue to be restricted for a further three months.

The hospitality sector is facing a £2.5bn rent debt crisis, according to trade body UKHospitality, which said the measures were “wholly welcome”.

Arbitration process

What’s more, communities secretary Robert Jenrick has said legislation will be introduced to ringfence outstanding unpaid rent that has built up when a business has had to remain closed.

Landlords would be expected to make allowances for the ringfenced rent arrears from these specific periods.

A binding arbitration process will be introduced so that tenants and landlords can come to a formal agreement when negotiating how to approach rent debt.

“These measures are wholly welcome and will banish a grim shadow that has hung menacingly over hospitality since the Covid crisis began 15 months ago,” UKHospitality boss Kate Nicholls said.

She added: “The legislation will form a strong bedrock for negotiated and fair settlements that can help heal the damage that the pandemic has wrought, and is a hugely positive signal that the Government has been listening to our sector, and acted to ease its plight."

Sharing of pain

The measures would usher “an equitable solution where there is a sharing of the pain” for landlords and tenants who have not already reached an amicable agreement on how to handle debt, Nicholls said.

The news was also welcomed by the beleaguered nightclub sector with Micheal Kill, CEO of the Night Time Industries Association (NTIA) called it a “much-needed reprieve”.

The reopening of clubs was delayed by four weeks after businesses had hoped to relaunch this month (21 June) after more than a year of enforced closure.

Kill added: “We are also pleased to see that the Government intends to bring forward legislation to introduce an arbitration mechanism for resolving disputes over legacy debts. We await further details of how the system will work in practice, and will seek to ensure the new system doesn’t put unfair burdens on tenants in the night time economy.”