Government gives retailers stay of execution with rent moratorium extension

The ban, which was introduced to stop landlords from taking “aggressive” action against businesses struggling with closures due to the coronavirus crisis, was due to end on June 30. 

However, in a statement to the House of Commons today (Wednesday), treasury secretary Stephen Barclay said the ban had been extended until March 2022. 

He added the recent decision by the government to push back an end to coronavirus restrictions for up to four weeks to July 19 “present additional challenges” to businesses. 

“Existing measures will remain in place, including extending the current moratorium to protect commercial tenants from eviction to March 25, 2022,” Barclay said. 

While the vast majority of retail businesses are open and trading on high streets, many hospitality businesses are struggling with reduced capacities, while other businesses such as nightclubs and leisure firms remain shut. 

Last week representatives from the chief executives of both the British Retail Consortium and UK Hospitality said the two sectors combined had accrued more than £5bn worth of unpaid rent debt. 

BRC chief executive Helen Dickinson welcomed Wednesday’s extension. 

“This is a very welcome announcement, addressing an issue of vital importance in the nick of time. We will be looking closely at the details, but welcome the continued support provided by Government to businesses.

“Retailers need time to trade their way out of debt”

“Just as retailers feared a wave of legal action by landlords, the Government has stepped in to offer both landlords and tenants more time to negotiate. The last 15 months have seen extended periods of forced closure for retailers, preventing many from making the turnover needed to cover rents. Retailers need time to trade their way out of debt; this announcement does exactly that. We’re also pleased to see the Government adopt our proposal for binding arbitration where agreements between parties cannot be reached.”

However, Dickinson also called on government to close the winding up petition “loophole” which she says still threatens retailers and jobs. 

The announcement will come as a blow to landlords. British Property Federation chief executive Melanie Leech recently told Retail Week she hoped the government would end the moratorium on June 30 and proceed on the basis of the Landsec/British Land proposal. 

The proposal said that while the moratorium should end as planned, accrued debt over the coronavirus crisis could be ringfenced and both tenants and landlords given six months to come to an agreement on repayment of unpaid rents. 

Furlough scheme still a huge part of the debate

Leech said on Wednesday: ”The Government has failed to recognise that commercial property owners are essential to the health of our town centres – to creating economic growth, jobs and opportunity. 

“The majority of property owners have already reached agreement with their tenants on rent, and millions of pounds have been provided to the most vulnerable tenants in the sectors most impacted by Covid-19. That support will continue in light of the delay in the recovery roadmap for those businesses that need it.

“The property industry itself proposed this idea of ringfencing rent arrears for the most vulnerable tenants hardest hit by Covid-19 – to provide more time for these tenants and their property owners to reach agreement, where they have not already done so, on rent debt built up during the pandemic. Whilst it is positive that the Government has taken this forward, there is no justification for delay. Most businesses are now open and trading and the legislation required to focus protection on the most vulnerable and to create a clear exit path to deal with rent arrears should have been put in place for the end of this month when the moratoriums are due to expire.

“Instead, another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support and will cast a long shadow over future investment to build back better.”

While chancellor Rishi Sunak has pushed back on calls for him to extend the furlough scheme beyond its current September end date, calls from affected industries such as hospitality and retail may redouble following the extension to the rent moratorium.

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