How to prevent commercial landlords enforcing rent arrears

COVID-19 Advice

Jason Elliott, our Head of Business Recovery, explains the new Government measures that are intended to safeguard the UK high street and advises on how they could be of use.

These temporary new measures have been created with the aim of protecting tenants on the UK high Street from the effects of “aggressive” debt recovery processes during the impact of Covid-19.

Table of Contents

• Details on temporary changes
• Plans for secondary legislation
• The aims of these measures
• Support for Directors

Details on temporary changes

While it is encouraging to see that the majority of landlords and tenants are doing their best to find amicable agreements with regards to rent arrears, there are a number of landlords who are seeking to utilise these “aggressive” debt recovery measures to pressure tenants into paying.

The government is attempting to stop this at the current time by introducing a temporary stop on:

• The use of Statutory Demands made between 1 March 2020 and 30 June 2020
• Winding Up petitions presented from Monday 27th April 2020 through to 30th June 2020

More specific details on these measures are to be included as part of the Corporate Insolvency and Governance Bill, set out in April by Business Secretary Alok Sharma.

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Plans for secondary legislation

Furthermore, there are plans in place for secondary legislation intended to give tenants more breathing space to be able to catch up on rent arrears. This will be done by stopping landlords from using Commercial Rent Arrears Recovery Rules (CRAR) until rent arrears are in excess of 90 days.

Currently, landlords are entitled to serve a tenant with a seven day Notice of Enforcement under the CRAR rules. This can be done to recover unpaid rent, which if not corrected can enable a landlord to invoke such measures as levying distress over assets that belong to the tenant.

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The aims of these measures

All of these measures are intended to help tenants who cannot currently pay their bills due to Covid-19. What remains to be seen is whether these will operate as “blanket” bans, or whether there will be criteria a tenant must meet, showing specific impacts of Covid-19 on their business to qualify.

The aim of these measures is clearly to safeguard UK High Street businesses and the millions of people they employ. Hopefully these are a last resort and landlords and tenants will be able to find amicable agreements without these needing to be enforced. Advice remains that tenants should try to pay towards their rent (whether in full or in part) wherever they are financially able.

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Additional advice for businesses

We will put together more updates at the point that information on additional legislation is released. For further information on any of these issues and how they may affect your business, as well as discussions on matters such as Company Administration or Company Liquidation, please contact Jason directly on jason.elliott@cowgills.co.uk or call us on 0300 303 8284.

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