The government published their findings last week from a consultation with the real estate industry. The consultation was to help determine how best to move forward after the impact of COVID-19 and the unavoidable delays that tenants have faced when paying their rental bills. What does the government’s proposal for COVID-19 rental arrears mean?
The government implemented emergency legislation to help protect commercial tenants that lost income when they were forced to close throughout lockdown. The measures that were introduced included the restriction of landlords’ abilities to recover arrears through the seizure of goods, placing a ban on the eviction of tenants due to rental arrears and also restrictions on statutory demands and winding up petitions. There have also been many other initiatives from the government to help businesses, such as the furlough scheme, CBILS and BBLs.
Many of these measures have been extended multiple times since the start of the pandemic to continue to help businesses survive the incredibly difficult terrain that we have been facing. And in June, the government announced that the protection of commercial tenants will be extended until March 2022. The ban on statutory demands and winding up petitions was also extended at the same time, but only until September 2021. The furlough scheme is also due to come to an end in September too.
Following a consultation with the real estate industry, the key takeaways from the government’s published findings are as follows:
1 – The government will be introducing legislation to ringfence arrears that were incurred as a result of the coronavirus pandemic and subsequent lockdowns.
2 – The legislation will enforce a process of binding arbitration between the commercial landlords and tenants, which will be utilised as a last resort if prior negotiations have failed.
3 – The government will publish an updated Code of Practice, which will form the basis of negotiations.
4 – Tenants who are able to pay their arrears should continue to do so.
The proposals all point to an expectation that landlords should continue to bear the burden of rental arrears with their tenants. But, equally, tenants should be prepared to negotiate with their landlords to reach a suitable payment arrangement. The negotiation process can often be complex and lengthy, and so it is important to work with trusted partners who are experts in their field and fully up to speed on what this new policy requires.
The opportunity for landlords to leverage winding up petitions will return to play on 1st October 2021 and could be the start of an influx of insolvencies. However, this is assuming that the temporary measures come to an end as expected on 30th September 2021, there has been no word yet on whether this is likely to change.
So, if you’re a landlord and facing difficulties with your commercial tenants and their rental arrears then reach out to the My Debt Recovery team today. We will be able to determine how the land lies in relation to the arrears and their connection to the pandemic and then we can help you to work towards positive negotiations and begin to recover the outstanding monies owed to you.
To get us on your side, reach out to our team of experts today. Contact us now.