Anger for many landlords as moratorium on recovery of commercial rent arrears further extended

17 June 2021
  • Philip Angell, Property Management Director, Cooke & Arkwright

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The government have announced that the moratorium against forfeiture and the use of CRAR to recover commercial rent arrears that have arisen due to the pandemic is to be extended from 30th June to 25th March 2022.

The announcement only applies in England but Welsh Government has brought in the same protections as Westminster after previous announcements.

Existing debt will initially be “ring fenced” and the government proposes to introduce legislation under which, where negotiations between landlords and tenants have been unsuccessful, the parties will go to a binding arbitration. This appears to apply to periods when businesses were forced to close by government lockdowns and the impact for rents during periods when businesses could trade, but at limited capacity, is as yet unclear. 

This March 2022 extension applies to forfeiture. Statutory demands and winding up petitions relating to rent debts due to the pandemic will remain restricted only until 30th September, meaning that, currently, this would be an option for Landlords from 1st October. In addition a landlord’s ability to commence court proceedings for rental arrears has not been impacted. 

This is a huge problem for the retail and hospitality sectors that needs to be addressed, with rent debt estimated in excess of £5 billion.   There is no question that many of these businesses need further support if they are to survive and this announcement will come as a relief to tenants in arrears.  Many landlords will be angered by this announcement however and will feel that,  instead of increasing financial support for the most affected sectors, the government is requiring landlords to “pick up the tab”. 

In my opinion it is inequitable that a financially stable tenant trading from a landlord’s property that has paid no rent, service charge or insurance since March 2020, and refuses to enter into any dialogue should be given such further protection.   I still maintain though that, in the current market, in most instances landlords are not going to rush to remove a viable tenant who is negotiating with the landlord in good faith.  It is in both parties interest to reach agreement.

Landlords may take some comfort from the fact that, in making the announcement the chief secretary to the Treasury said,  “All tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord as soon as restrictions are removed on their sector.” 

We will now have to wait and see the detail of the proposed legislation to understand the implications for both landlords and tenants

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

Steve Phillips, Group Finance Director, Welsh Rugby Union Group