Protection against evictions and winding-up petitions extended

The government is extending protection against evictions and winding-up petitions for businesses that are still struggling because of Covid-19.

Legislation will be introduced to ringfence outstanding unpaid rent that has built up when a business has had to remain closed during the pandemic.

Landlords are expected to make allowances for the ringfenced rent arrears from these specific periods of closure due to the pandemic and share the financial impact with their tenants.

The legislation will help tenants and landlords work together to come to an agreement on how to handle the money owed – this could be done by waiving some of the total amount or agreeing a longer-term repayment plan.

This agreement should be between the tenant and landlord and, if in some cases, an agreement cannot be made, the law will ensure a binding arbitration process will be put in place so that both parties can come to a formal agreement. This will be a legally binding agreement that both parties must adhere to.

To ensure landlords are protected, the government is making clear that businesses that can pay rent, must do so. Tenants should start paying their rent as soon as restrictions change, and they are given the green light to open.

The existing measures in place to protect commercial tenants from eviction will be extended to 25 March 2022. This is to ensure that the sectors who are unable to open have enough time to come to an agreement with their landlord without the threat of eviction.

The extension applies to all businesses, but the new measures that will be introduced by new legislation will only cover those impacted by closures. This mean that rent debt accumulated before March 2020 and after the date when relevant sector restrictions on trading are lifted, will be actionable by landlords as soon as the tenant protection measures are lifted.

The arbitration process will be delivered by private arbitrators but in accordance with guidelines that will be set out in the legislation, and they will have to go through an approval process to prove their impartiality.

Statutory demands and winding up petitions will also remain restricted for a further three months to protect companies from creditor enforcement action where their debts relate to the pandemic.

Please contact us if you would like more information about the issues raised in this article or any aspect of commercial property law.