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