As widely anticipated, and inevitably following the second national lockdown, the Government has announced a further, but notably final, extension to the moratorium on forfeiture of commercial business property to 31 March 2021.
In addition, the restrictions relating to statutory demands and winding-up petitions were also extended to 31 March 2021, markedly without any mention of this being a final extension. See our Law-Now which explains the original insolvency restrictions.
And, as a reminder, the regulations on CRAR were recently amended so that with effect from 25 December landlords can only exercise CRAR where there is an equivalent of 366 days’ net rent due. Landlords’ options for defaulting tenants continue to be constrained, but the Government’s messaging was clear: those who can afford to pay rent should pay.
Landlords will welcome the certainty of an end date to the moratorium which this announcement offered, the effect of which (along with the other restrictions) has allowed some tenants, clearly with the means to pay, to delay or avoid paying anything, with very little effective recourse for landlords typically experiencing long court delays.
It is also evident that the rent debt-mountain accumulated since March 2020 is not going to magically disappear; the further down the road this debt-can is kicked, the bigger the issue it becomes for all stakeholders.
So, the endgame is now in sight. While struggling tenants may breathe another brief sigh of relief with the latest restrictions, it is clear this is merely a short window in which to engage with landlords to try to reach agreement, or be faced with the real threat forfeiture will pose, even if that might seem somewhat counterintuitive in current times. To encourage and aid these discussions, the Government intends to publish further guidance early in the new year.
Alongside the extensions, Robert Jenrick has also announced a review of “outdated commercial landlord and tenant legislation”, to address concerns that the current framework does not reflect the current economic conditions. The review will be launched early next year and will consider a broad range of issues including the Landlord & Tenant Act 1954 Part II, different models of rent payment, and the impact of Coronavirus on the market.