UPDATED: The government has issued new rules which stop commercial landlords from using aggressive rent collection tactics.
The measure will be in place until June at the earliest.
UK restaurants, pubs and shops will be breathing a sigh of relief as the pressure eases to cover rent costs. We recently reported that some in the leisure and hospitality industries had faced winding up orders and statutory demand notices to recover rent costs.
In addition, landlords will not be able to use Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.
“I know that like all businesses they are under pressure, but I would urge [landlords] to show forbearance to their tenants,” business secretary Alok Sharma said.
Chief executive of UK Hospitality, Kate Nicholls, said:
“Many businesses in our sector have no revenue whatsoever coming in, so paying rents has been out of the question for some. This extra space will allow businesses to survive and to find a way to work with landlords. If social distancing measures are to be in place for some time, as we now believe they will, this measure may need to be extended to ensure that businesses can survive.”
In a statement, the British Property Federation (BPF), said:
“The British Property Federation welcomes the actions the Government has taken so far to support businesses affected by Coronavirus and its willingness to take further action as this fast-moving situation continues to develop and hits all parts of the economy.
“As the disruption continues, the challenges facing these businesses will spread to other types of property occupiers and property owners will stand ready to support those that need it.”
However, concern remains over commercial landlords who may also be struggling with financial difficulties themselves.
The government has said that tenants who can pay should contribute what they can and come to an agreement with their landlord.
Section 82
Last month, Section 82 of the Coronavirus Act 2020 was introduced to ban the forfeit of commercial leases until 30 June 2020 – or longer if the government deems it necessary – for not paying rent.
However, this didn’t stop landlords from issuing statutory demand notices and winding up orders, making debt claims or pursuing Commercial Rent Arrears Recovery. These threats are serious – winding up orders and statutory demand notices can push businesses into insolvency within days.
Larger brands that have been affected include Caffe Concerto, Pho, David Lloyd Clubs and PureGym.
Mixed reactions
Some small business owners are having to turn to unsympathetic landlords.
Janine Tozer, founder of Not Just Pets, has branches in Bath and Frome. She has two separate landlords and, at the time that the lockdown started, approached both about either deferring rent payments or paying them by half for three months. Neither of the landlords were happy with the proposals, saying that she’s still trading and should be relying on emergency government funding.
“We were doing deliveries, but we were taking less than half of our normal income. We’ve furloughed four members of staff and are under extreme pressure,” she told SmallBusiness.co.uk
Tozer is on a forum for local traders in Frome. Her fellow entrepreneurs have had a real mix of reactions from their landlords: “Some have contacted the tenants offering to help, others have offered no help at all and others half-help like ours,” she said.
In response to these findings, Andrew Goodacre, Bira’s CEO, said: “I am disappointed by the reaction of some landlords to the current retail crisis. Some landlords have tried to help whereas others have simply ignored the fact that a retailer has had their store closed by government actions and are still waiting for cash to come into the business.
“My advice to retailers is to talk to the landlord, discuss payment plans and try to find a way forward. The government has introduced a three-month moratorium for non-payment of rent and this time should be used to productively find a way forward to benefit both parties.”
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