New measures are being brought in that could help dealerships that are facing aggressive rent collection.
Business secretary Alok Sharma announced the temporary move yesterday (Apr 23) in a bid to protect high street shops and other companies that are already under strain. Instead, they will be asked to pay what they can for the duration of the coronavirus pandemic.
The government said that most landlords and tenants had been working well together to agree debt obligations. However, some landlords have been using what it called ‘aggressive debt recovery tactics’, which was ‘putting tenants under undue pressure’.
Now the use of statutory demands and winding-up orders are going to be temporarily banned where a company can’t pay its bills because of coronavirus, so that they don’t plunge into greater financial problems. The measures are to be made part of the Corporate Insolvency and Governance Bill, which Sharma set out earlier this month.
Secondary legislation will also give tenants more breathing space to pay their rent by stopping landlords from using Commercial Rent Arrears Recovery unless they are owed 90 days of rent that hasn’t been paid.
The move is aimed at saving jobs by protecting businesses from permanent closure. But the government added that although landlords were being urged to give tenants breathing space where needed, tenants should pay rent where they could afford it or what they could afford, since commercial landlords were also experiencing pressures. Sharma said:
‘In this exceptional time for the UK, it is vital that we ensure businesses are kept afloat so that they can continue to provide the jobs our economy needs beyond the coronavirus pandemic.
‘Our unprecedented package of support can help commercial landlords, including through the recent expansion of the Coronavirus Business Interruption Loans Scheme.
‘I know that like all businesses they are under pressure, but I would urge them to show forbearance to their tenants. I am also taking steps to ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the Covid-19 emergency continues.’
The temporary emergency measures come on top of a moratorium on evictions for commercial tenants for at least three months.
Helen Dickinson, chief executive of the British Retail Consortium, said: ‘Rents are a huge burden for retailers that must be paid even where shops are closed. We thank Alok Sharma for his swift action, which will give retailers some vital relief and help safeguard millions of jobs all across the country.’