The Government has announced today a further extension to the protection against eviction for business owners suffering financial difficulties due to the ongoing coronavirus pandemic.

The Government aims to help hard-hit business owners to take stock during the winter period, rebuild and come out stronger in the spring of 2021 when we all hope the warmer weather combined with the vaccine will allow a period of rebirth of our way of life and prosperity.

Music to your ears – or more hardship to come?

This will be music to the ears for many struggling business owners, but is unlikely to be met with much enthusiasm by landlords who have been unable to press any tenants, whether ailing or otherwise, for rent for the majority of 2020, and now beyond.

Empathetic landlords

In our experience the vast majority of commercial landlords have been willing to act with empathy and understanding towards their occupiers during the Pandemic, both to comply with the new Code of Practice (albeit it is not mandatory) and in the interests of fairness to help businesses make it through this period for the wider benefit.

Most are fully committed to the “getting through this together” attitude and have been willing to take a hit to protect occupying businesses during the lockdowns and challenging situations brought about by restrictions and closures.

In our experience, this has involved rent concessions, rent deferments or altering lease terms concerning rent in a more wholesale way. Although of course, the right approach for a particular scenario depends on the finances of both landlord and tenant and wider business needs.

Final extension?

This new extension of the protection against evictions has been described as the “final” extension and it is being offered as the last chance for commercial landlords and their tenants to sit down together and come to an agreement in respect of how they will deal with any unpaid rents.

However, the Government has been keen to be very clear that if businesses can pay their rent – they should!

This is not necessarily happening in practice to date, with some tenants who benefit from ongoing good finances, using the situation to their advantage.

The Government has confirmed that it aims to publish guidance soon to support negotiations between commercial landlords and tenants in these delicate negotiations.

Review of commercial landlord and tenant legislation

Alongside this announcement, the Communities Secretary, Robert Jenrick, has also confirmed that he will be commissioning a review of what is increasingly being seen as “outdated” commercial landlord and tenant legislation.

The Government is hoping to address concerns that have arisen in particular during the course of the pandemic, that current commercial landlord and tenant legislation is not fit for purpose as it fails to reflect the current economic conditions that commercial landlords and their business occupiers now find themselves in.

So as commercial property professionals we should perhaps brace ourselves for a period of change.

What will the review consider?

It is hoped that in the aftermath of Covid-19, the proposed review of commercial landlord and tenant legislation will:

  • Enable increased collaboration between commercial landlords and their tenants.
  • Improve the overall commercial leasing process.
  • Encourage declining high streets and town centres to thrive.

Our team of restructuring and insolvency solicitors have extensive experience in dealing with matters arising out of insolvency and business distress. If you would like to get in touch with our insolvency solicitors, please call 023 8082 7406 or email online.enquiries@la-law.com.

Our experienced property lawyers offer efficient legal advice on landlord and tenant law. If you would like more information, please contact our real estate solicitors by emailing online.enquiries@la-law.com or calling 01202 786357.

The article is co-written by Melia Hirst, Claire Long and Rachel Gimson.