UK government extends moratorium on commercial rents

Changes provide relief for thousands of businesses that were facing huge rent bills from 1 July

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Last modified on Wed 16 Jun 2021 11.32 EDT

The UK government is extending a moratorium on commercial rents until March next year and introducing a mandatory arbitration process to tackle debts where landlords and tenants cannot agree.

The changes provide relief for thousands of businesses that were facing huge rent bills from 1 July when the current moratorium was set to end.

With many food, drink and entertainment venues still shut or operating at less than full capacity, hospitality leaders had warned of a “cliff edge of failure” without a longer grace period.

Landlords were down £5.3bn on rents last year, according to data from the analysts Remit Consulting, while two-thirds of retailers have said they had been threatened with legal action by landlords looking to collect payments.

Steve Barclay, the chief secretary to the Treasury, told parliament on Wednesday that the government planned to introduce legislation “to support the orderly resolution of these debts that have resulted from Covid-19 business closures” to parliament by next spring.

Barclay said those businesses no longer facing trading restrictions should start to pay rent again. The government’s stipulation comes after landlords said certain tenants are exploiting the situation by refusing to pay despite being capable of doing so.

Barclay said new laws would provide a “backstop” where commercial negotiations were not successful which would provide a “a long-term solution to the resolution of covid19 rent”.

Helen Dickinson, the chief executive of the British Retail Consortium, which represents thousands of businesses, welcomed the adoption of binding arbitration agreements and extension of the moratorium.

“This is a very welcome announcement, addressing an issue of vital importance in the nick of time. We will be looking closely at the details, but welcome the continued support provided by government to businesses.

“Just as retailers feared a wave of legal action by landlords, the government has stepped in to offer both landlords and tenants more time to negotiate. The last 15 months have seen extended periods of forced closure for retailers, preventing many from making the turnover needed to cover rents. Retailers need time to trade their way out of debt; this announcement does exactly that.”

The hospitality industry said the measures would bring back stability to an “uncertain and unsettled property market”.

Kate Nicholls, the chief executive of trade body UKHospitality, said: “These measures are wholly welcome and will banish a grim shadow that has hung menacingly over hospitality since the Covid crisis began 15 months ago.

“The legislation will form a strong bedrock for negotiated and fair settlements that can help heal the damage that the pandemic has wrought, and is a hugely positive signal that the government has been listening to our sector, and acted to ease its plight.”

She welcomed the arbitration requirement, saying it should bring “an equitable solution where there is a sharing of the pain”.

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