I have today laid a statutory instrument that will extend the moratorium on commercial landlords’ right to forfeit a lease due to the non-payment of rent until 31 March 2021.
This will also automatically amend the commercial rent arrears recovery measures led by the Ministry of Justice, through which landlords can seize goods in lieu of unpaid rent. To ensure alignment between this measure and the moratorium, from the next quarter date on 25 December the total number of days’ outstanding rent required for this tool to be used will be increased to 366 days, and this will be in place until 31 March. Accompanying restrictions on the service of statutory demands and winding-up petitions, currently in place until 31 December, are also being extended until 31 March 2021. This means formal demands for the repayment of debt and requests to the courts to liquidate a business owing rent, cannot be made until after the final moratorium comes to an end.
The moratorium was established via section 82 of the Coronavirus Act 2020 and was due to expire on 31 December 2020. It has now been extended for a final time by three months and will expire on 31 March 2021.
The objective of this extension is to protect businesses unable to pay their full rent from eviction until March 2021, taking the length of these measures to one year. This will give them time to start to recover from the impact of the pandemic, plan for the future and protect jobs. The Government have brought forward this measure to support the businesses struggling the most during the pandemic, such as those in hospitality. We are clear that those able to pay their rent, must do so.
We recognise the impact that this extension has on landlords and lenders, therefore Government are being clear that this is the final extension to this temporary measure. We expect both sides of the sector to use this time to negotiate and the Government will issue further guidance to facilitate constructive discussions.
We are aware of concerns that some tenants who could pay rent are refusing to do so. The Government are clear that this measure is not a rent holiday: where a tenant is unable to pay in full, landlords and tenants should be coming together to negotiate in good faith, using the principles set out in the voluntary code of practice we published in June. This recommends that those tenants who can pay in full should do so, those who cannot should pay what they can and 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.
While we have seen many constructive discussions happening between landlords and tenants, I am aware there are growing concerns that the current commercial leasehold legislation has not kept pace with the commercial realities of the sector.
I am therefore also announcing we will be launching a review of the commercial landlord and tenant relationship in the new year. The review will make recommendations to the Government on how to ensure a flexible and fit-for-purpose legislative framework that enables sustainable occupation of thriving high streets/town centres in the future. It 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; for example if we can improve the experience of UK businesses by ensuring that foreign-based landlords have an agent operating in the UK. Both landlords and tenants have previously called for such a review and I will make further announcements on the detail, including a timeline and full scope, in due course.
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 are currently considering an extension to their equivalent moratorium. Section 83 relates to Northern Ireland, who are also considering a similar extension. The Scottish Government passed separate emergency legislation to implement similar measures.