The government has ordered a moratorium on commercial landlord sanctions for at least three months, meaning tenants who miss rent payments because of coronavirus can keep their leases.
The news will be a boon to struggling retailers and leisure businesses in particular, since the next quarterly rent day is on 25 March. However, it could have significant consequences on landlords that are grappling with their own balance sheet problems.
Under a moratorium on lease forfeiture for occupiers, landlords will not be able to exercise any right of forfeiture on tenants that cannot pay their rent.
The news came ahead of the government ordering almost all shops to close and for citizens to remain in their homes unless shopping for essentials. This will be reviewed in three weeks.
The provision will only delay the right of forfeiture; it will not affect a landlord’s right to claim forfeiture or recover rent after the three-month period ends. The government said it will monitor the impact on commercial landlords’ cash flow and “continues to be in dialogue with them”.
The government said many landlords and tenants are already reaching voluntary arrangements about rental payments due shortly.
Businesses that will stay open include:
- Restaurants, strictly for food delivery and takeaway services
- Cafes or workplace canteens at hospitals, care homes or schools, prisons and military centres, or providing food and drink to the homeless
- Supermarkets and premises offering food, including market stalls
- “Health shops” including pharmacies
- Corner shops, newsagents and post offices
- Pet shops, hardware stores, bicycle shops, launderettes, car rentals and garages
- Banks.
Robert Jenrick, communities secretary, said: “We are protecting both people and their businesses by providing the urgent support they need. We know many commercial landlords are already setting a great example by working closely with tenants and offering rent deferrals or holidays.
“However, these new measures will provide reassurance to businesses struggling with cashflows and ensure no commercial tenant is evicted if they cannot pay their rent because of coronavirus over the next three months.”
Kate Nicholls, chief executive of UKHospitality, said: “With the next pending rent day falling this Wednesday, this move by the government is hugely welcome and will help to protect jobs across the sector.
“The industry has been pressing ministers for several days to act on this crucial issue, and we are thankful they have responded positively to our concerns.
“While this removes the immediate cashflow pressure of quarter rent day, the government has made clear that the negotiation is now with lessee and landlord to reach a solution on payment.
“Hospitality businesses want to work with landlords constructively during this crisis to find solutions and the hope now is that they enter into meaningful discussions on the optimum way forward.”
See also: Coronavirus pushes UK retail landlords to the edge
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