City view

Moratorium on forfeiture for commercial tenants extended

Caroline Fleet, Partner, Head of Real Estate
City view
On 16 September 2020, the government announced the extension of its moratorium on commercial tenant evictions until the end of 2020.

The move was made in a bid to protect jobs and to give struggling high street retailers and restaurant chains a chance to 'focus on rebuilding their business over the autumn and Christmas period'.

The government’s move to extend the ban for evicting commercial tenants until the end of the year will not have been taken lightly.

On the one hand, the government is trying to protect the retail and hospitality sectors in the face of reduced footfall and a number of high profile collapses. But a balance must be struck as it could be argued this comes at the expense of landlords.

There is also an inherent difficulty in differentiating between at-risk businesses that are struggling to pay overheads, versus those that use the policy to avoid paying rent. The question arises as to how will tenants pay the significant rent now due.  

A happy medium is tough to find. The government will be hoping this is the last extension of the ban in an attempt to be fair to landlords whilst ensuring most tenants and landlords can come to an agreement on rent owed, without the need for court proceedings.

The problem of course is that this continued extension to the end of the year does not help landlords and tenants come to an agreement and protect landlords from collecting rent from those that can pay whilst the government supports those businesses that can’t.

In addition, landlords on the high street are having to deal with the use of Company Voluntary Arrangements (CVAs) by tenants to change the terms of long standing rental contracts, which was seen in the recent case with New Look who will now switch to turnover-linked rent.

For more information on how this might affect you, please contact Stacy Eden or your usual Crowe contact.

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Caroline Fleet
Caroline Fleet
Partner, Head of Real Estate