A temporary ban of the eviction of high street businesses for non-payment of rent has been extended by the government until the autumn.
The moratorium on evictions was extended on Friday from 30 June to the end of September. The government also published a code of practice to marshal increasingly tense negotiations between landlords and tenants as both sides grapple with the extreme financial pressure created by the coronavirus shutdown.
Next Wednesday is the latest quarter day, when retail and hospitality chains are required to pay three months’ rent. However, many businesses have severe cashflow problems after being forced to shut their doors during the lockdown.
Only about half the rent due on the previous quarter day in March was paid. Landlords expect even less to arrive in their bank accounts this month, a shortfall that is putting the finances of property companies under strain too.
Robert Jenrick, the communities secretary, said the government was extending measures to prevent struggling companies from eviction over the summer. The new code, he hoped, would “help unlock conversations on rent and future payments whilst ensuring best practice is displayed across the board as we confront the challenges of this pandemic”.
The window that prevented landlords from taking legal action against tenants who had not paid their rent (unless the amount owed is 189 days or more) has also been extended until 30 September. Landlords are also prohibited from sending their tenants statutory demands, a formal request for payment or winding-up petitions – legal notices usually sent by a creditor requesting the courts close a company that owes it money – until the autumn.
Property owners have complained that some tenants are exploiting the emergency measures to renege on rent. The code, which is voluntary, states that tenants should “continue to pay their rent in full if they are in a position to do so” and that others should “pay what they can”. Landlords should provide support if they are able to, with both sides encouraged to be transparent about their finances.
The code outlines options that could be pursued to break the deadlock between landlord and tenant, including offering rent holidays or switching to a monthly rather than quarterly payment schedule. Landlords could also draw from rent deposits on the understanding that they would not need to “topped up” in the short term. Any reduction in service charges should also be passed on to tenants, it suggests.
Helen Dickinson, chief executive of the British Retail Consortium, the industry trade group, said the lockdown had created a “gaping hole” in many retailers’ finances. These woes had been exacerbated by continued rent demands on stores that were closed, she said.
The code did not provide a solution for businesses who were “simply unable to pay what is being demanded”, according to Dickinson. She said: “Without further action, both retailers and landlords remain in a precarious situation that could lead to substantial numbers of redundancies as soon as tenant protections expire.”