Why The UK Commercial Lease Eviction Ban Goes On And On And On

The UK government has announced that the moratorium on the enforcement of commercial leases will be extended until 25 March 2022, a full two years after it was first introduced.

Thanks to political cover from the Labour opposition, and fears of widespread job losses in the hospitality and licensed sector, the government has resisted pressure from landlords to end the moratorium.

In a statement on Wednesday 16 June to the House of Commons, Chief Secretary to the Treasury Steve Barclay announced the moratorium's extension. This had been widely anticipated since Monday’s announcement that the final stage of lockdown restrictions would now take place on 19 July.

Barclay said he planned to introduce legislation to promote the orderly resolution of debts resulting from Covid-19’s impact on business. Legislation would introduce a backstop so that where negotiations are not successful landlord and tenant go into binding arbitration, he said.

“Until that legislation is on the statute book existing measures will remain in place to protect tenants from eviction until 25 March 2022,” he told Parliament.

“It is the government’s first position that both landlords and tenants should resolve debts through negotiation and I welcome the various schemes already in operation.

“To be clear all tenants should start to pay rent again under terms of their lease, or as otherwise agreed with their landlord, as soon as restrictions are removed on their sector… this strikes [the] right balance between protecting landlords and supporting those businesses most in need, based on the successful Australian approach.”

The move was welcomed by the official opposition spokesperson, Rachel Reeves.

You can see Barclay's televised statement here.

The move will dismay landlords.

“The Government has failed to recognise that commercial property owners are essential to the health of our town centres — to creating economic growth, jobs and opportunity," British Property Federation Chief Executive Melanie Leech said.

“The majority of property owners have already reached agreement with their tenants on rent, and millions of pounds have been provided to the most vulnerable tenants in the sectors most impacted by Covid-19. That support will continue in light of the delay in the recovery roadmap for those businesses that need it.

“Instead, another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support.”

But it has been welcomed by tenant representatives who emphasised the scale of job losses if the moratorium had not been maintained.

The British Retail Consortium calculates that the pandemic has left retailers with £2.9B in accumulated rent debts, with two-thirds of retailers facing legal action if the moratorium had ended in July. They warned that ending the moratorium could see thousands of shops close.

Almost 30% say they have already faced County Court Judgements from commercial landlords. Furthermore, 80% of tenants said some landlords have given them less than a year to pay back rent arrears accrued during the pandemic.

“An extension to the moratorium to achieve a binding or negotiated settlement is a desperately needed lifeline for businesses, jobs and livelihoods," Commercial Tenants Association Chief Executive Peter Bell said. "We believe all moratoria should continue with the addition of a new moratorium on debt recovery proceedings. These measures will allow meaningful and structured negotiations to take place between landlords and tenants. 

“Landlords need to treat tenants as customers and should not use bullying techniques to get rent paid,” he added.