Commercial property landlords banned from demanding rent arrears

A lone member of the public sits in an empty Princesshay Shopping Centre in Exeter, England.

High-street retailers and other companies are being asked to ‘pay what they can’ to their landlords.
Photograph: Dan Mullan/Getty Images

Commercial property landlords in the UK have been temporarily banned from taking legal action against tenants who have not paid their rent, to protect retailers and other businesses from “aggressive rent collection” during the coronavirus crisis.

Landlords are prohibited by the government until 30 June from sending their tenants statutory demands, a formal request for payment or winding-up petitions – a legal notice usually sent by a creditor to request that the courts close a company that owes it money.

The business secretary, Alok Sharma, said most landlords and tenants had been working together well, but he criticised some landlords for putting tenants under pressure to pay, urging them to show “forbearance”.

The government has previously allowed commercial tenants to delay rental payments for three months without fear of eviction. The extended measures will prevent landlords from using commercial rent arrears recovery, or sending in bailiffs, unless they are owed 90 days of unpaid rent.

High-street retailers and other companies are being asked to “pay what they can” to their landlords.

Landlords believe certain tenants are exploiting the situation by refusing to pay rent and have begun to take legal action to recoup money owed.

The fashion and homeware retailer Matalan was issued with a winding-up petition by a landlord this month for failing to pay rent it owed. The retailer, founded by the billionaire John Hargreaves, has since settled with the landlord.

The indebted shopping centre owner Intu Properties threatened some of its tenants with a statutory demand at the end of March, and said it had “neither the desire or financial capacity to bankroll global, well-capitalised brands who have just decided they don’t want to pay their rent.”

Retailers and hospitality companies, many of whom have not had any revenue for several weeks, had been calling on the government to do more to protect firms.

The measures will provide firms with some “breathing room”, said Kate Nicholls, chief executive of UK Hospitality, which represents the cafe and restaurant business.

Nicholls said companies would find a way to work with their landlords, but added: “If social distancing measures are to be in place for some time, as we now believe they will, this measure may need to be extended to ensure that businesses can survive.”

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