Share the Load ‘Ringfenced’ Rent Arrears for the Hospitality Sector



Hands up if you saw it coming…


Boris Johnson’s recent announcement - that the final stage of coronavirus regulation easing was to be extended by another 4 weeks – came as no surprise to many people across the country.


It did however come as huge disappointment to many, not least those business owners in the hospitality sector, who had hoped, at long last, to be able to reopen.


Their landlords too, who have been unable to receive rent, recover arrears or even repossess their properties…


…they were left hugely disappointed by the announcement as well, because it would surely mean another month (at least) without receiving what they are owed.


And now that’s being written into legislation…


The new legislation will expect landlords to make allowances for ringfenced rent arrears coming from specific periods of closure due to the pandemic, and to share the financial impact with their tenants.


It’s almost as if they haven’t been doing this already!


The Government, led on this by Robert Jenrick, hope that landlords and tenants will be able to work together on an agreement of how and when the outstanding arrears should be paid, if it is to be paid at all.


In some comfort to commercial landlords, it will also be the case that tenants are told to pay rent as soon as they possibly can, meaning as soon as they are given the green light to open up again.


This would perhaps be a little more reassuring if we were coming out of a period where all tenants had played by the rules, instead of manipulating the system for their own benefit, rather than using it for the breathing space for which it was designed.


The current measures preventing commercial landlords from evicting their tenants will now be extended until the 25th March 2022, owing to the fact that tenants will need time to reach agreements on repayments with their landlords, and not because we’re going to experience another lockdown (apparently…)


To sum it all up, Communities Secretary Robert Jenrick said:


“We have provided unprecedented support to businesses to help them through the pandemic. However, as we continue to lift restrictions and start to return to business as usual, tenants and landlords should be preparing to pay rent or come to an agreement if they have not done so already.”


It’s good in theory, all this ‘coming to an agreement’ talk, and it’s no surprise that the hospitality sector is backing it, because it gives them the breathing space they undoubtedly need...


...but...


...for commercial landlords up and down the land, it’s just another extension to a problem that they are seeing rolled over, time and time again.


They have our sympathy, our understanding and our absolute word that when they need us (and when we’re able to do something about it) we’ll be there.


Business Secretary, Kwasi Kwarteng, said about the new arrangements:


“The new arbitration process will be underpinned by law, providing commercial tenants and landlords with peace of mind that Covid-related rent debts will be settled fairly, and with finality. In the meantime, I encourage landlords and tenants to keep working together to reach mutually beneficial agreements.”


In the meantime then, as Kwarteng says, it’s about hanging on in there and opening the dialogue with tenants.


Full information on the new legislation brought forward on the 16th June can be found here:


https://www.gov.uk/government/news/eviction-protection-extended-for-businesses-most-in-need


...but as usual, our clients can get in touch with us regarding any queries or concerns, and we’ll do our best to put your minds at ease.


We digest the information for you, so that our service can be as strong and reliable as possible.


We’re not quite there yet, but we’re getting there, and ultimately, the survival of businesses in the hospitality sector simply has to be a good thing for the commercial rental industry in the long run.


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