Government Consultation into Commercial Rent Arrears


As businesses begin to open their doors again, many will no doubt be breathing a sigh of relief - it has been an extremely tough few months since they were forced to shut their doors during the third lockdown. Following the extension to the moratorium on lease evictions (ending 30 June 2021), the Government has turned its attention to what will happen next as commercial tenants are faced with the prospect of having to clear arrears and/or begin to pay rent again with a revenue stream beginning to flow in and landlords keen to balance their books.

Commercial landlords, businesses, lenders, investors, property professionals and anyone with an interest in or connection to the commercial property market in England are being invited to take part in a consultation and provide input as to what steps have been taken to negotiate rent payments and payment levels and how arrears have been dealt with. 

The options open to the Government, depending on the results of this consultation, range from doing nothing and allowing the current measures to simply lapse on 30 June 2021 to a more phased easing where the moratorium will lapse but the insolvency measures and additional rent arrears amendments to CRAR will remain for a period of time. The Government will be mindful of the impact and potential consequences for businesses of a sudden withdrawal of protection. It may take a more tailored approach to different businesses or prescribe formal steps, such as mediation or adjudication between landlords and tenants. 

The consultation is intended to be a gauge for the Government as to the current state of play and the best way of withdrawing or replacing the protective measures currently in place. Whilst in most cases, landlords and tenants have reached agreement in a collaborative way it highlights the increasingly interventionist role taken by the Government during the last year. This level of involvement in negotiated commercial arrangements is unique and indicative of the vulnerability of commercial occupiers as they take tentative steps towards re-opening.  The attitude of funders will also be key to how landlords act going forward. 

All those affected are encouraged to take part and inform the Government's response.

This survey is separate to the Government's review into potential reforms to commercial landlord and tenant legislation and also does not form part of any review into the use of CVAs by tenants.

The link to the consultation can be found below and is open until 4 May 2021. It presents a real opportunity for a variety of views to be heard.  

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The Government’s objective is to gather more evidence to understand how landlords and tenants are responding to the build-up of rent arrears that has occurred as a result of businesses being unable to trade normally during the pandemic. This will inform a better understanding of the risk to economic recovery posed by remaining rent debts, and to understand how landlords and tenants are adjusting existing lease terms to reflect the period of recovery that many tenant businesses will need once the trading restrictions are lifted. The evidence gathered will inform government policy regarding the exit from the existing measures and any need for additional measures to preserve viable businesses and the jobs that they provide.
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