The UK government has launched a consultation with commercial landlords and tenants about what steps should be taken when the current ban on commercial evictions ends on 30 June.
In its call for evidence document the Ministry of Housing, Communities & Local Government outlined six options under consideration for an exit to the current measures:
• Option 1 – allow these measures to expire on 30 June 2021;
• Option 2 – Allow the moratorium on commercial lease forfeiture to lapse on 30 June 2021 but retain the insolvency measures and additional rent arrears amendments to CRAR for a period of time;
• Option 3 – Target existing measures to businesses based on the impact that COVID restrictions have had on their businesses for a limited period of time;
• Option 4 – Encourage increased formal mediation between landlords and tenants;
• Option 5 – Non-binding adjudication between landlords and tenants; and
“If there is evidence that productive discussions between landlords and tenants are not taking place, and that this represents a substantial and ongoing threat to jobs and livelihoods, the government will not hesitate to intervene further,” the government said in its outline of the consultation.
The Covid-19 pandemic has highlighted the sometimes fraught relationship between tenant and landlord. So far the government has managed to head-off any major disputes but at some point is going to have to make a decision on the best way forward.
“The decision to extend the commercial eviction ban and bailiff enforcement activity will be welcomed by struggling retailers but, once again, sees landlords reduced to the open piggybanks of the sector. The unpaid rent bill is estimated at £4.5 billion, so as things stand, it seems the Government is just delaying the inevitable reckoning once the measures are lifted. It feels a little bit like relying on wallpaper to cover up dry rot,” Katherine Campbell, Head of Real Estate dispute resolution at Reed Smith said last month when the previous extension was announced.
Insight Comment
It's still a very contentious issue with both sides arguing strong over the merits of their respective points of view. On the one hand you have the landlords pointing to abuses in the system and on the other struggling businesses who have not been able to operate for much of the last 12 months. The government will have to look at both sides and come up with a sensible solution.