The UK Government has announced that it will introduce new legislation preventing landlords from using what is being described as ‘aggressive debt collection tactics’ against their commercial tenants.
Towards the end of March 2020 the UK Government enacted legislation banning landlords from evicting commercial tenants for non-payment of rent for a period of three months. This legislation was created in an attempt to keep businesses in their premises despite the economic hardship caused by the COVID-19 pandemic. Whilst many landlord-tenant relationships around the country have remained strong, a growing number of landlords have attempted to side-step this legislation by seeking payment of overdue rent through Commercial Rent Arrears Recovery and by issuing winding-up petitions against their commercial tenants.
The new legislation, soon to be introduced by Government, will seek to prevent landlords from using these mechanisms to secure payment of overdue rents by doing the following:
- Banning the use of Statutory Demands (made between 1 March 2020 and 30 June 2020) and Winding-Up Petitions (presented from 27 April 2020 through to 30 June 2020) where a business cannot pay its rent due to coronavirus; and
- Preventing landlords from using Commercial Rent Arrears Recovery unless they are owed 90 days of unpaid rent.
These provisions will provide additional layers of protection to tenants who are being adversely affected by the pandemic, with the hope that as the country gradually moves out of lockdown these businesses remain trading and continue to contribute positively to the economy.
It should be noted that these provisions do not eliminate or reduce tenants’ liabilities for the rent monies owed. The measures are temporary, and once lifted tenants will be liable to their landlords for any unpaid rent.
If you are a commercial tenant or landlord and have any questions regarding this article, or a related legal matter, then please do not hesitate to contact the Commercial Property Team on 01603 610911 or email us here.