A ban on landlords evicting firms for unpaid commercial rent is being extended for another nine months, sparking dismay from senior property industry figures, with one describing it as ‘crazy.’
The ban, which stops landlords taking tenants to court for non-payment, was due to end on 30 June.
Treasury Secretary Stephen Barclay said the delay in easing lockdown restrictions, had presented additional challenges to business.
It is estimated that firms in retail and hospitality are £5bn in rent debt.
Mr Barclay told the Commons: “Existing measures will remain in place, including extending the current moratorium to protect commercial tenants from eviction to March 25, 2022.”
He also announced plans for a binding arbitration scheme to resolve disputes between landlords and commercial tenants. Mr Barclay said the scheme should be in place for when the eviction ban is lifted.
But Mr Barclay added: “To be clear, all tenants should start to pay rent again in accordance with the terms of their lease or as otherwise agreed with their landlord as soon as restrictions are removed on their sector if they are not already doing so.”
While retailers and hospitality firms welcomed the measures, there were claims that some profitable tenants were abusing the ban to avoid paying rent they can afford.
Jonathan De Mello, partner at independent retail property consultancy CWM, said: “It’s crazy. I’m not sure who they are consulting with or who made that decision. This absolutely screws landlords over because it’s such a long amount of time.”
He said the arbitration process was “almost pointless” because landlords and tenants had largely reached their own agreements.
British Property Federation chief executive Melanie Leech said: “Another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses that can afford to pay rent, but are refusing to do so, to continue their abuse of Government and property owners’ support and will cast a long shadow over future investment to build back better.”
However, Kate Nicholls, chief executive of UKHospitality, welcomed the plans, saying the extension “will banish a grim shadow” hanging over the sector.
Thousands of companies, especially in the hospitality sector, are still unable to trade normally, among them nightclubs and leisure firms.
In April last year the Government blocked legal attempts to evict shops, restaurants and other businesses that had stopped paying rent, as part of emergency measures to soften the economic impact of the pandemic.
Hospitality leaders had called for an extension of the moratorium and for more financial support from the Government.
Earlier this month, the chief executives of trade groups UK Hospitality and British Retail Consortium (BRC) told MPs that both sectors have accrued a combined £5bn in rent debt.
Data for the first quarter of 2021 shows that only 74 per cent of rent was collected by landlords 60 days following the end of the period after tenants were battered by the pandemic.
Hospitality, leisure and retail operators have also benefited from a business rates holiday since the start of the crisis.
Helen Dickinson, chief executive of the British Retail Consortium, many of whose members have felt lockdown most acutely, said the extension comes “in the nick of time”.
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