Covid-19: moratorium on evictions by commercial landlords

The government has introduced emergency legislation to enact a moratorium on commercial landlord sanctions and debt enforcement for at least three months so that those who cannot pay their rent because of cashflow difficulties related to coronavirus will be protected from eviction, reports Pat Sweet

These measures, included in the emergency Coronavirus Bill currently going through parliament, will mean no business will be forced out of their premises if they miss a payment in the next three months.

As commercial tenants will still be liable for the rent after this period, the government says it is also actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.

Robert Jenrick, communities secretary, said: ‘We know many commercial landlords are already setting a great example by working closely with tenants and offering rent deferrals or holidays.

‘However, these new measures will provide reassurance to businesses struggling with cashflows and ensure no commercial tenant is evicted if they cannot pay their rent because of coronavirus over the next three months.’

Kate Nicholls, CEO of industry body UK Hospitality, said: ‘With the next pending rent day falling this Wednesday, this move by the government is hugely welcome and will help to protect jobs across the sector.

‘While this removes the immediate cashflow pressure of quarter rent day, the government has made clear that the negotiation is now with lessee and landlord to reach a solution on payment.

‘Hospitality businesses want to work with landlords constructively during this crisis to find solutions and the hope now is that they enter into meaningful discussions on the optimum way forward.’

Mike Cherry, Federation of Small Businesses national chairman, said: ‘We know sensible conversations between landlords and commercial tenants are taking place – but having this legislative backstop to prevent evictions during the worst of the crisis will provide much needed peace of mind for many small businesses.’

The amendment to the Coronavirus Bill on commercial leases will apply to England, Wales and Northern Ireland. It applied to all commercial tenants.

The change will come into force when the Coronavirus Bill receives Royal Assent. It will last until 30 June, with an option for the government to extend if needed.

‘Empty’ business rates relief

The owners of premises which have been ordered to shut for business as a result of coronavirus regulations are eligible to claim empty rates relief from the day they closed until 31 March, when the government’s support package takes effect, according to Colliers International.

The property consultancy points out that the prohibition by law on restaurants, pubs, bars, nightclubs, theatres, cinemas and gyms staying open, which started from Saturday March 21, means that such properties cannot be occupied.

It says that as the recently announced 12-month period of rates relief for the sector does not apply until 1 April, all ratepayers in these categories will therefore be eligible for empty rates relief for the period 21 – 31 March.

Since March rate bills will have already been paid, Colliers advises such businesses should consider applying for refunds for these extra days until the end of the month. As occupation of the categories is now prohibited by law, Colliers believe that state aid rules will no longer be an issue.

Turning to other sectors, Colliers also believes that given the advice regarding groups not assembling and people working from home, the implication is that businesses could declare that their offices and work locations are ‘empty’. 

This would mean they can also request the appropriate relief on these from 21 March, with the caveat that they should check to ensure such actions do not prejudice any grants the government is offering. 

John Webber, head of business rates at Colliers International, said: ‘Despite 100% business rates relief given to the retail and leisure sectors from April 2020, these businesses are going to be hard pressed to keep their heads above water in the weeks ahead.

‘We sympathise with our clients and advise them to claim every day of rates relief that they can.

‘We also acknowledge there is clarity for some other sectors who can may also be able to claim for relief on virtue of being "empty”.

‘We are advising our clients in this situation to do so and not to pay their rate bills as of 1 April.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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