Published: 09/12/2020The Government has today announced an extension to the commercial rent moratorium until 31 March 2021. This is not a surprise, because it is a means for protecting business at very limited expense to the Treasury.
It is also much-needed by many occupiers, whose cashflow has been very significantly impacted by inability to trade during lockdown, and for whom Christmas trading offers an ability to perhaps replenish the coffers.
It is however on the other hand difficult for many landlords, particularly private landlords who rely upon property investments for their pension income, or who have commercial mortgages, and whose hands have been completely tied by this one size fits all solution.
There are undoubtedly tenants who can afford to pay, but who have taken advantage of the moratorium. Equally, there are many landlords who could afford to be more generous (in offering deferral, abatement, once and for all use of a rent deposits, etc.)
We understand that the government intends to put out additional advice early in the New Year to help guide parties to come to arrangements. In our experience many parties have done, but we are also aware of various negotiations where, for one reason or another, parties are unable and/or unwilling to yield.
It will be interesting to see whether a further three month stay on legal proceedings acts as an incentive for parties to come to agreement, or whether landlords will just wait for April, and commence proceedings for the recovery of debts or for repossession then. By then, the size of accumulated arrears for many tenants will mean they have little choice but to give up their tenancy. This is really just a sticking plaster therefore.
It would have been helpful if the government had simultaneously offered some direction on their intentions for Business Rates in 2021/2022. At present the business rates moratorium ends simultaneously with the commercial rents moratorium, meaning a double-whammy for occupational costs in April.
Read Government Announcement