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Commercial Property Tenants and Landlords

Volume 680: debated on Wednesday 16 September 2020

I am today informing the House that I have laid a statutory instrument that will extend the moratorium on commercial landlords’ right to forfeit a lease due to the non-payment of rent to the end of the year.

The moratorium was established via Section 82 of the Coronavirus Act 2020 and was due to expire on 30 September. It has now been extended by three months and will expire on 31 December 2020. This extension will help provide businesses and employees with certainty and protect vital jobs, particularly in the retail and hospitality sectors.

This is being accompanied by an amendment to Commercial Rent Arrears Recovery measures led by the Ministry of Justice. Accompanying restrictions on the service of statutory demands and winding-up petitions, implemented through the Corporate Insolvency and Governance Act 2020, are currently in place until 30 September, and we are working closely across Government to consider a similar extension to these.

Since March, Government have implemented a range of measures to support commercial property tenants and landlords. The objective of these measures was to preserve tenants’ businesses through the covid-19 lockdown and to give time and space to landlords and tenants to agree reasonable adjustments to rent and lease terms, including terms for the payment of accumulated rent arrears.

This is a temporary measure being extended; however Government recognise that it cannot go on indefinitely. We recognise the impact that this extension has on landlords, therefore we expect both sides of the sector to use this time to negotiate and Government will intervene further if necessary.

This extension will provide the businesses with certainty as they scale up their recovery from covid-19 and will ensure that sectors most acutely impacted by the closure of non-essential retail can benefit from the Christmas trading period.

This is not a rent holiday. Government are clear that landlords and tenants should be coming together to negotiate in good faith where a tenant is unable to pay in full, using the principles set out in the voluntary code of practice we published in June which recommends that those tenants who can pay should do so while those landlords who are able to grant concessions should do so. This code of practice and approach was supported by a wide range of sector bodies representing tenants and landlords.

England, Northern Ireland and Wales are covered by the protection from forfeiture in the Coronavirus Act. Section 82 relates to England and Wales, and the Welsh Government have already laid a statutory instrument to extend the measures for an additional three months. Section 83 relates to Northern Ireland, who are currently considering a similar extension. The Scottish Government passed separate emergency legislation to implement similar measures.