The initial 3 month Forfeiture Moratorium announced by the Government in March 2020 has turned into a 15 month Moratorium with no clear roadmap for Landlords and Tenants on how it will be lifted.
At present the Moratorium has been extended until 30th June 2021 and it is estimated that the UK now has commercial rent arrears of more than £5 billion.
This isn’t just a concern for Landlords, but it affects Charities, Local Authorities and Institutional Investors and in turn Pensions.
Landlords have shared the burden and sought to support Tenants by offering rent concessions and payment plans, however frustration has been mounting.
Tenants have received a wide package of financial support from the Government including loans and Business Rates relief, yet Landlords have received very little and still face 100% empty rates if they cannot re-let the property.
Landlords on the whole are unlikely to seek to forfeit leases on mass once the Moratorium is lifted, particularly in retail and hospitality, where there is little demand for new Tenants.
A bigger issue is tenants without any protection may decide to simply hand back the keys or opt for insolvency leaving even more empty properties on the UK high street putting more jobs at risk.
Unfortunately the solution is not one size fits all, and a phased plan designed to protect the hardest hit Tenants, particularly those forced to close and unable to operate online during the pandemic would be sensible.
Fairness needs to prevail, and perhaps one option is to ring fence Covid arrears and work out a payment plan with Tenants. We are awaiting Government policy and at the moment there is still not a clear pathway for resolution.
Contact our Commercial industry professionals Ben or Brent for further details on 01282 456677.
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