Government extends commercial evictions ban until the end of 2020

In a statement this afternoon, the government said it had extended its ban on landlords evicting commercial tenants behind on their rent payments until at least the end of the year, in a bid to protect jobs. 

The secretary of state for housing Robert Jenrick said extending the ban until the end of the year would give struggling high street retailers and restaurant chains a chance to “focus on rebuilding their business over the autumn and Christmas period”.

Jenrick, however, said that “where businesses can pay their rent, they should do so” as the measure was only designed to support those “struggling the most during the pandemic”.

The moratorium not only prevents landlords from evicting commercial tenants for not paying rent, but also prevents them from using Commercial Rents Arrears Recovery to enforce unpaid rent on leases. 

Jenrick said: “This Government is committed to supporting businesses and our high streets at this difficult time, and this extension of support will help businesses recover from the impacts of the pandemic and plan for the future.”

Business secretary Alok Sharma added: “During this particularly challenging time for businesses, it is crucial that both landlords and tenants have the clarity and reassurance they need to build back better from the pandemic.

“Extending the temporary measures we put in place earlier this year to protect businesses from the threat of eviction will give them some much-needed breathing space at a critical moment in the UK’s economic recovery.”

Relief for retailers

The move will come as a relief to high street retailers up and down the UK who had warned that a failure to extend the measure beyond September could lead to a spike in store closures and job losses. 

However, landlords have argued that since the measures were first introduced by Chancellor Rishi Sunak, many well-capitalised retail businesses were effectively taking advantage of the scheme to withhold rent payments. 

British Property Federation chief executive Melanie Leech described the government’s decision as “hugely disappointing” for the landlord community. 

“It is hugely disappointing that the government has decided on a blanket extension to the moratorium, when the majority of property owners and tenants are working collaboratively together, and well-capitalised businesses continue to exploit the intervention, refusing to pay rent despite being able to afford it.

“It is imperative, for the health of the pensions and savings funds that own our high street, that the government confirms this is the last extension and sets out an exit strategy to clearly outline to both property owners and tenants how we are going to transition back to normal market conditions and overcome what is a growing and for some an insurmountable challenge of rent arrears.”

British Retail Consortium director of business and regulation Tom Ironside said: “It remains a difficult time for store-based retailers, who face high costs from coronavirus safety measures, and significantly lower footfall. While the extension of the moratorium will provide a respite for many struggling retailers, a large Christmas Day rent bill would be a disaster during the all-important peak trading period. Nonetheless, we hope those landlords who haven’t agreed settlements with their tenants will use this extra time and negotiate a reasonable deal that shares the impact of coronavirus fairly.”

‘Not sustainable’

Revo, which represents both retailers and landlords, called the extension “a real blow to the high street”. 

Chief executive Vivienne King said: “We have repeatedly explained to government how the moratoriums are being enjoyed by major financial businesses which they were never intended for. A short-term emergency measure aimed at genuinely vulnerable operators is being exploited to preserve cash flow by major high street chains who will only prolong the pain of high street recovery and unseat the Government’s own levelling-up agenda.

“The shortfall in UK rent payments at the second quarter alone was £1.5bn, and that can now be expected to increase sharply later this month. This sudden loss of income will reverberate through the financial system to savers and pensioners that directly or indirectly rely on commercial property for income and may begin to have material impacts on credit supply if lenders find themselves overwhelmed by defaulting landlord borrowers. The current situation is simply not sustainable.

“By extending the moratoriums, government is unintentionally undermining contractual arrangements between property owners and occupiers, and encouraging a disregard for fundamental principles of our legal system. At a time when we desperately need capital investment into town and city centres, we fear this hasty decision will have a long tail.”