Businesses have been given “a licence not to pay rent” after the government banned landlords from taking action against tenants who don’t pay as a result of the coronavirus.
New legislation will temporarily stop landlords from issuing statutory demands and winding-up orders against tenants struggling to pay bills because of the impact of Covid-19.
It will be enforced until the end of June but could be extended, the government said. Further legislation to prevent landlords taking action to recover rent unless they are owed 90 days of unpaid rent is also being introduced.
Alok Sharma, the business secretary, said that the measures would ensure “the minority of landlords using aggressive tactics to collect their rents can no longer do so while the Covid-19 emergency continues”.
The action was welcomed by retailers and hospitality groups. Helen Dickinson, chief executive of the British Retail Consortium, said it “protects firms who — during these extraordinary times — are unable to meet their rent obligations”.
However, landlords fear the measures will open the floodgates to a mass non-payment of rent by businesses.
Adam Coffer, 41, managing director at EPF, a leisure landlord with more than 30 tenants, said: “We are sympathetic to terrible challenges our tenants face. But taking it to the point of not being able to recover deferred rent at all, even at concession or discounted rates, would be like throwing a grenade into every UK property owner’s businesses.”
Danielle Drummond-Brassington, head of the real estate disputes practice at the law firm CMS, said: “This proposal seems very one sided and is effectively a licence not to pay rent.”
Only a third of retailers paid their rents due for the current quarter in full and on time, according to Knight Frank.
Vivienne King, chief executive of Revo, which represents retail property landlords, said: “A moratorium on winding-up petitions and statutory demands removes the incentive of last resort for property owners.”