Commercial tenants get protection from landlord debt collection

The government is introducing additional measures to protect shops and other companies from aggressive rent debt collection by landlords during the Coronavirus.

The law will not permit petitions to be presented, or winding-up orders made by landlords, where the tenant company’s inability to pay is the result of COVID-19. The legislation will be in force until 30 June, and can be extended in line with the moratorium on commercial lease forfeiture.

The measures will be included in the Corporate Insolvency and Governance Bill, sponsored by the Business Secretary, Alok Sharma.

Regulations will also be put in place to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR), unless they are owed 90 days or more of unpaid rent.

The aim is to safeguard high street premises from permanent closure during this time.

However, while landlords are urged to give their tenants the breathing space they need, the government encourages tenants to pay rent if they can afford to.

The temporary emergency measures come on top of other business support measures, including a moratorium on evictions for commercial tenants for at least a 3-month period.

Landlords, who have to pay their lenders and maintain properties, have also seen their incomes fall, and the longer the lockdown continues the greater the chance of some property owners also experiencing financial difficulties.