Government confirms it will not write-off rent debt accrued by business owners due to lockdown restrictions

Government confirms it will not write-off rent debt accrued by business owners due to lockdown restrictions

THE Government has confirmed that it will not ‘cover’ commercial rent debts incurred as a result of the Covid-19 pandemic in Britain.

Instead, the Ministry of Housing, Communities and Local Government has opened a consultation to find the best solution for commercial landlords and tenants who have yet to agree terms on the “build-up of rent arrears”.

Launched on April 6, information gained through their Commercial Rents and COVID-19: Call for Evidence will inform the Government’s next move regarding the ever-growing issue of rent debt, which is being faced by business owners across the country who have been unable to open their premises during the pandemic.

Currently a moratorium on commercial lease evictions, established by the Government under the Coronavirus Act 2020, prevents landlords from evicting commercial tenants for non-payment of rent due to lockdown restrictions.

The Government also imposed limits on the use of the Commercial Rent Arrears Recovery procedure – restricting landlords’ abilities to recover rental arrears through the seizure of their tenants’ goods.

However, both of those protections are set to expire on June 30, 2021 and the Government is now investigating what should happen next.

“This call for evidence will support the government’s decision making on the best way to withdraw or replace these measures while preserving tenant businesses and the millions of jobs that they support,” the Ministry explained as they launched their consultation this week.

“If there is evidence that productive discussions between landlords and tenants are not taking place, and that this represents a substantial and ongoing threat to jobs and livelihoods, the government will not hesitate to intervene further,” they added.

But, in the detail of the consultation document, they clearly confirm that – despite what some business owners may have expected or, at least, been hoping for – they will not be writing-off commercial rent debt for those impacted by the pandemic.

“The Government recognises that the Covid-19 pandemic has been a very challenging time for everyone and is continuing to have a significant impact on our businesses,” the document explains.

“The impact has been most acute for businesses which support in-person and socially motivated consumption, which have been mandated to close for large periods of the last 12 months.”

They add: “The Government’s primary aim throughout the pandemic has been to preserve the millions of jobs that those businesses support.

“These measures to support the economy this year and next year, take the total cumulative cost of the Covid rescue package since the start of the pandemic to £352bn.

“Given the extensive package of support, we do not intend to introduce specific financial support to cover commercial rent debts.”

Instead, they explain, they are committed to supporting commercial landlords and tenants “to agree their own arrangements for paying or writing off rent debts by 30 June”.

They explain: “The publication of the Prime Minister’s roadmap out of lockdown provides new certainty upon which landlords and tenants can have meaningful discussions about their ongoing relationship, accumulated rent debt, and ongoing lease terms.

“However, if these discussions do not happen and there remains a significant risk to jobs, the government is also prepared to take further steps.”

The Government is now encouraging commercial landlords and tenants to have their say on the issue of rent debts by responding to their call for evidence.

Responses should be made online here and must be received by 11.45pm on May 4, 2021.

For further information or enquiries email [email protected]