Government temporarily bans landlords from serving statutory demands
Yesterday, the Government introduced new measures to protect UK high street from ‘aggressive rent collection’. The update is available here. The measures intend to safeguard the UK high street by temporarily voiding statutory demands and winding up petitions issued to commercial tenants.
Whilst the majority of landlords and tenants are working together to reach agreement on rent obligations, some landlords have been taking aggressive debt recovery action. To prevent these unfair practices, the Government will temporarily ban the use of statutory demands and winding up petitions if a company cannot pay their rent due to coronavirus.
The guidance refers to ‘high street shops and other companies’, so the scope of protection is not entirely clear. It would seem to apply to ‘retailers’ only but could be read as applying to any commercial tenant in arrears due to coronavirus. The Corporate Insolvency and Governance Bill (yet to be introduced) should clarify the extent of the protection.
Any winding-up petition must first be reviewed by the court to determine why. If the reason for the inability to pay rent is the result of coronavirus, the court will not permit petitions to be presented, or winding-up orders made. It seems landlords can still take such action for historic rent arrears accrued before the pandemic.
The Government is also laying further legislation to prevent landlords using Commercial Rent Arrears Recovery (CRAR) unless the unpaid rent exceeds 90 days.
The temporary measures will be in place until 30 June 2020 but can be further extended by the Government.
The Government continue to support landlords including the recent expansion of the Coronavirus Business Interruption Loans Scheme. The Government acknowledges that landlords are facing their own pressures and are working with banks and investors to seek ways to address these issues.
If you have any queries in relation to this update or want to discuss steps you can take to protect your position, please do get in touch. We will keep you updated with important developments.Back to Our Thinking →