Lease forfeiture moratorium to be extended beyond March

The Times​​​ reports that both the business department and the Ministry of Housing, Communities and Local Government (MHCLG) have been talking to the property, retail and hospitality sectors over how best to extend the moratorium, which prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic.

By the end of March, when the moratorium is currently due to expire, it is understood that close to £3bn in unsettled rent will have accumulated within hospitality as a result of the Covid crisis.

According to trade body UKHospitality, 40% of businesses within the sector have not received any rent concessions from landlords.

To try and defuse this time bomb, the Government may also introduce guidance on how landlords and their tenants should determine how bills are split.

Bill Hughes of the Property Industry Alliance told The Times​: “There is every chance [the moratorium] will be extended.

“The Government is now distinguishing between leisure and hospitality, which have been hit very hard, and retail, which is more of a mixed bag.”

Hughes adds that he thinks the moratorium could be extended in a way that differentiates between those sectors.

When first announced back in March last year, the lease forfeiture moratorium was only intended to be in place for three months.

Since then it has been extended in quarterly increments alongside other protections introduced in May, which temporarily restrict landlords from pursuing aggressive forms of rent recovery such as statutory demands and winding-up petitions.

The MHCLG, led by Robert Jenrick, is expected to clarify the new rules on evictions and rent collection in the coming weeks, with any significant changes potentially requiring primary legislation to be passed.

When the moratorium was last extended, in December, the Government vowed not to do it again​​, although the prolonged lockdown has led to a rethink.

“Throughout the pandemic we have provided an unprecedented £280bn package of economic support, while supporting businesses and high streets, as well as safeguarding millions of jobs,” the Government said.

Jonathan Downey, who was instrumental in calling for the introduction of the lease forfeiture moratorium and subsequently founded the Hospitality Union action group to deal with the massive disruption to the industry caused by the Coronavirus pandemic, says news of the extension is encouraging, but adds that the Government must use the time to nationally legislate to find a solution to the rent debt.

"They need to legislate nationally for two things," he says.

"A national turnover rent for the period that the pandemic has impacted business, let’s say, 1 April 2020 to 31 December 2021 (provided the tenant elects to do this); and provide some support to landlords.

"This will mean zero rent for the long periods of zero turnover (due to lockdown, curfew, tier restrictions, unviability etc) and a gentle build back to something like normal levels of business over the rest of 2021.

"If tenants have already agreed deals, then these would stand.

"Landlords must be forced to accept drastically reduced terms. Almost all will never agree deals otherwise.

"As a landlord, it makes much more sense to wait until the forfeiture moratorium is lifted so that locks can be changed and then [they can] negotiate from that position of strength.

"Some ‘concessions’ may be made to repay over time, but many landlords still expect every penny of rent to be repaid immediately or at some point. It’s just how they are."