Halt to business evictions extended and Landlord & Tenant Code of Practice introduced

As previously reported by us, on 23 March 2020 the government announced that provision was being included in what was then the emergency Coronavirus Bill to enact a moratorium on commercial landlord sanctions and debt enforcement for at least three months.

The UK Government has now:

  • announced amendment of the Coronavirus Act 2020 to provide a further halt to business evictions until the end of September 2020 and
  • published a Code of Practice “to help commercial landlords and tenants map out plans for economic recovery during the coronavirus pandemic”. You can download the Code below.

The GOV.UK press release on this latest news reads as follows:

Government provides further halt to business evictions and more support for high street firms

New code provides support to shops and local firms planning their future recovery with their landlord.

  • The UK government will extend measures to prevent high street businesses facing eviction over summer
  • New code provides support to shops and local firms planning their future recovery with their landlord
  • Industry leaders back code and welcome measures to support affected businesses

The UK government has extended measures to prevent struggling companies from eviction over the summer.

The extension, until the end of September, comes alongside further support to help local businesses plan for economic recovery following the coronavirus pandemic. 

A new code of practice has been developed with leaders from the retail, hospitality and property sectors to provide clarity for businesses when discussing rental payments and to encourage best practice so that all parties are supported.

These interventions are in addition to the comprehensive financial package provided by the UK government to businesses during this difficult time and is in recognition of the strain that the sector is currently under.

The code is voluntary for businesses and is relevant to all commercial leases held by businesses in any sector which have been impacted by the coronavirus pandemic.

It encourages tenants to continue to pay their rent in full if they are in a position to do so and advises that others should pay what they can, whilst acknowledging that landlords should provide support to businesses if they too are able to do so.

The suspension of the forfeiture of evictions will come as a relief in particular to pubs, cafes and restaurants, after the hospitality sector called upon the government for action in this area.

Communities Secretary, Rt Hon Robert Jenrick MP said:

“As our high streets come to life and our town centres open for business, it is crucial that both landlords and tenants have clarity and reassurance as they seek to keep their finances stable and bounce back. That is why we are extending measures to protect those who are unable to pay rent from eviction so that businesses have the security they need to plan for their futures. And in recognition of the strain that the virus has had on our high streets, our new code, backed by leaders across the industry, will help unlock conversations on rent and future payments whilst ensuring best practice is displayed across the board as we confront the challenges of this pandemic.”

Business Secretary Alok Sharma MP said:

“From clothes stores to our local book shop, we want as many high street businesses as possible to emerge from the pandemic, in the best position to bounce back. During this particularly challenging time for businesses, our retail stores are safely welcoming shoppers back and taking the necessary steps to drive economic recovery. By putting a stop to unreasonable evictions, these measures will protect jobs and provide further flexibility to our high street businesses that were trading successfully before the COVID-19 emergency, so they can focus on continuing to deliver for their customers and communities.”

Across the UK, the code will encourage tenants and landlords to be transparent in their discussions and to act reasonably and responsibly whilst recognising the impact that coronavirus has had on businesses’ finances.

The UK government has confirmed the following changes to the existing package of measures for the commercial sector:

  • We will lay a statutory instrument to amend the Coronavirus Act to extend the time period for suspension of the forfeiture of evictions from June 30 to September 30, meaning no business will be forced out of their premises if they a miss a payment in the next three months.
  • We will also lay secondary legislation to prevent landlords using Commercial Rent Arrears Recovery unless they are owed 189 days of unpaid rent. The time period for which this measure is in force will be extended from June 30 to September 30. 
  • An amendment to the Corporate Insolvency and Governance Bill has been tabled which will extend the temporary ban on the use of statutory demands and winding-up petitions where a company cannot pay its bills due to coronavirus until 30 September.

UK Finance has also confirmed its members’ continued support for commercial landlord customers including amendments to facilities and capital payment holidays.

The UK government’s financial package of measures to support businesses during the economic emergency includes:

  • A Coronavirus Job Retention Scheme where small and large employers can  apply for a government grant of 80% of workers’ salaries up to £2,500 a month. The scheme will be backdated to 1 March 2020 and available for at least 3 months, with first grants to be paid within weeks.
  • Deferral of the next quarter of VAT payments for firms, until the end of June – representing a £30 billion injection into the economy.
  • £330 billion worth of government backed and guaranteed loans to support businesses. 
  • A Bounce Back Loans scheme, providing loans of up to £50,000 to benefit small businesses with a 100% government-backed guarantee for lenders. These loans will be interest free for the first 12 months and businesses can apply online through a short and simple form. 
  • A Self-Employed Income Support Scheme to help eligible freelance workers receive up to £2,500 per month in grants for at least 3 months.

UPDATE:

On 16 September 2020, the Communities Secretary Robert Jenrick announced that businesses will be protected from the threat of eviction until the end of year, providing commercial tenants with greater security and protecting vital jobs.

The government’s press release on this announcement reads as follows:

Government extends support to stop business evictions this year

Commercial tenants will be protected from the risk of eviction until the end of 2020 helping businesses to protect jobs.

The government has extended support to prevent business evictions until the end of 2020

  • This move will help businesses over the coming months and protect people’s jobs
  • This is an addition to the £160 billion package of support available for businesses during the pandemic

Businesses will be protected from the threat of eviction until the end of year, providing commercial tenants with greater security and protecting vital jobs, Communities Secretary Robert Jenrick has announced today (16 September 2020).

Today’s measures are on top of the wider ranging financial package provided by the UK government, backed by £160 billion, to protect jobs, incomes and business throughout and beyond this pandemic.

The government is clear that where businesses can pay their rent, they should do so, as this support is aimed to those businesses struggling the most during the pandemic.

This move will help those businesses most in need of additional support to remain in their premises without the threat of eviction for the rest of this year, giving them the chance to focus on rebuilding their business over the autumn and Christmas period.

Secretary of State for Housing Rt Hon Robert Jenrick MP said:

“I am announcing today that we are extending support to protect those businesses that are unable to pay their rent from eviction to the end of the year. This will stop businesses going under and protect jobs over the coming months. This government is committed to supporting businesses and our high streets at this difficult time, and this extension of support will help businesses recover from the impacts of the pandemic and plan for the future.”

Business Secretary Alok Sharma said:

“During this particularly challenging time for businesses, it is crucial that both landlords and tenants have the clarity and reassurance they need to build back better from the pandemic. Extending the temporary measures we put in place earlier this year to protect businesses from the threat of eviction will give them some much-needed breathing space at a critical moment in the UK’s economic recovery.”

This extension will protect businesses that are struggling to pay their rent due to the impact of COVID-19 from being evicted and help the thousands of people working in these sectors feel more secure about their jobs.

The government will also extend the restriction on landlords using Commercial Rents Arrears Recovery to enforce unpaid rent on commercial leases, until the end of the year.

The guidance is clear both landlords and tenants should continue to work together to agree rent payment options if businesses are struggling. In June, the government published a Code of Practice to support these discussions.

The Code of Practice was produced alongside leading businesses and trade associations to help guide and encourage all parties to work together to protect viable businesses and ensure a swift recovery.

Further information

In addition to the measures extended today, the government has also committed:

  • Over £35 billion on the furlough scheme, protecting over 9.6 million jobs.
  • Around £8.5 billion for nearly 3 million self-employed people.
  • Over £15 billion from SME and large business Coronavirus Business Interruption Loans.
  • Over £35 billion via over 1 million Bounce Back Loans.
  • Over £11 billion in business grants and £10 billion in business rates relief.
  • Over £27 billion in VAT deferrals, supporting nearly 500,000 businesses.
  • Nearly £33 billion at the Summer Economic Update – supporting the Jobs Retention Bonus and Eat Out to Help Out, which has seen over 84,000 premises claim £520 million.
  • Billions of pounds of easements to help local authority cash flow, as well as over £300 million to support Test and Trace and other emergency funding.