Commercial rents and COVID-19: call for evidence

The government has launched a call for evidence as it looks towards an exit from the measures which are in place until 30 June 2021 protecting commercial tenants from forfeiture and the use of Commercial Rent Arrears Recovery (CRAR).

Why is the government calling for evidence?

The government notes that this call for evidence will support its decision making process on the best way to withdraw or replace the current moratorium on forfeiture and restrictions on the use of CRAR which are in place until 30 June 2021, while preserving tenant businesses. 

The government is looking for evidence so it can understand how landlords and tenants are responding to the build-up of rent arrears that have occurred as a result of businesses being unable to trade normally during the pandemic.  The government wants to understand the risk to economic recovery posed by these longstanding rent arrears and it states it will not hesitate to intervene further if it is clear 'productive' discussions between landlords and tenants are not taking place. However, the call for evidence states that the government does not intend to introduce specific financial support to cover rent.

What is being considered?

If the evidence justifies it the government states it will consider both regulatory and legislative options to protect viable businesses and jobs.  The following options are being considered and the call for evidence seeks views on these:

Option 1 - Allow the measures to expire on 30 June 2021;

Option 2 - Allow the moratorium on commercial lease forfeiture to lapse on 30 June 2021 but retain the insolvency measures and additional rent arrears amendments to CRAR for a period of time;

Option 3 - Target existing measures to businesses based on the impact that COVID restrictions have had on their businesses for a limited period of time;  

Option 4 - Encourage increased formal mediation between landlords and tenants;

Option 5 - Non-binding adjudication between landlords and tenants;

Option 6 - Binding non-judicial adjudication between landlords and tenants.

What's not covered?

This is a focused call for evidence on commercial rents over the last year and is not the wider review of the commercial landlord and tenant relationship looking at potential reforms to the commercial property legislation.  The government notes that further announcements regarding this review will follow in due course. 

In addition, the restrictions on the use of winding-up petitions and statutory demands which is covered by the Corporate Insolvency and Governance Act 2020 are not being considered as part of this call for evidence.  However, the government notes that they 'are interested in the length of time for which these measures should be in place and how they relate to the other measures'. The consultation also states that the government is separately continuing to monitor the use of CVAs but again they do not form part of this call for evidence.

Respond

The consultation takes the form of an online survey and is open until 4 May 2021.