The government has extended the moratorium stopping commercial tenants who cannot pay their rent from being evicted until the end of the year as it seeks to protect jobs.
It has also extended the restriction on landlords using commercial rent arrears recovery to enforce rent collection on commercial leases until the end of 2020.
Housing and communities secretary Robert Jenrick said the move would “stop businesses going under and protect jobs over the coming months”.
Business secretary Alok Sharma added: “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.”
Even so, the government said that those businesses that could afford to pay their rent should do so, as the support was aimed at those companies struggling most.
The move follows a £160bn financial package already in operation to stop businesses from going bust, resulting in a wave of job losses.
However, the move has been criticised by both the British Property Federation and Revo.
BPF chief executive Melanie Leech said the all-encompassing extension was “hugely disappointing… when the majority of property owners and tenants are working collaboratively together, and well-capitalised businesses continue to exploit the intervention, refusing to pay rent despite being able to afford it”.
She added: “It is imperative, for the health of the pensions and savings funds that own our high street, that the government confirms this is the last extension and sets out an exit strategy to clearly outline to both property owners and tenants how we are going to transition back to normal market conditions and overcome what is a growing and, for some, an insurmountable challenge of rent arrears.”
Meanwhile, Vivienne King, chief executive of Revo, said the move was “a real blow to the high street”.
“We have repeatedly explained to the government how the moratoriums are being enjoyed by major financial businesses which they were never intended for. A short-term emergency measure aimed at genuinely vulnerable operators is being exploited to preserve cash flow by major high street chains who will only prolong the pain of high street recovery and unseat the government’s own levelling up agenda.
“Notwithstanding the government’s Code of Practice, a pound of unpaid rent by a major business is a pound less to support a small business.
“The shortfall in UK rent payments at the second quarter alone was £1.5bn, and that can now be expected to increase sharply later this month. This sudden loss of income will reverberate through the financial system to savers and pensioners who directly or indirectly rely on commercial property for income and may begin to have material impacts on credit supply, if lenders find themselves overwhelmed by defaulting landlord borrowers. The current situation is simply not sustainable.
“By extending the moratoriums, the government is unintentionally undermining contractual arrangements between property owners and occupiers, and encouraging a disregard for fundamental principles of our legal system. At a time when we desperately need capital investment in town and city centres, we fear this hasty decision will have a long tail.”
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