The business secretary has announced a new set of measures that will be introduced to protect high street businesses “under strain” from the ongoing pandemic.
High street shops, and other companies facing financial difficulties, will now be protected from “aggressive” rent collection and asked to pay what they can as the lockdown continues.
Whilst the majority of landlords and tenants are “working well together” to reach agreements on debt obligations, some landlords have been using aggressive debt recovery tactics, according to the government.
To end such practices, there will now be a temporary ban on the use of statutory demands and winding up orders where a company cannot pay their bills due to the pandemic.
Secondary legislation will also prevent landlords using commercial rent arrears recovery unless they are owed 90 days of unpaid rent.
The measures will be included in the corporate insolvency and governance bill, which business secretary Alok Sharma set out earlier this month.
The government assured that these measures will “further safeguard the high street and millions of jobs” by protecting them from permanent closure.
Nonetheless, it is urging tenants to pay rent where they can afford it or “what they can in recognition of the strains felt by commercial landlords too”.
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.
“I know that like all businesses they are under pressure, but I would urge landlords 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.”
He added: “The temporary emergency measures are designed to acknowledge the pressures landlords are facing while encouraging cooperation in the spirit of fair commercial practice.
“They also come on top of a substantial package of business support measures, including a moratorium on evictions for commercial tenants for at least a three month period.”
CEO of the British Retail Consortium, Helen Dickinson OBE, said: “Rents are a huge burden for retailers that must be paid even where shops are closed.
“We have raised this problem with the government and today’s announcement protects firms who – during these extraordinary times – are unable to meet their rent obligations.”
She added: “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.
“We look forward to the finer details, however it is clear the government is listening and willing to act.”
CEO of UK Hospitality, Kate Nicholls, said: “This is a very helpful and pragmatic response from the Secretary of State and will give hospitality businesses some very valuable breathing room.
“Many businesses in our sector have no revenue whatsoever coming in, so paying rents has been out of the question for some. This extra space will allow businesses to survive and to find a way to work with landlords.”