Changes to rent collection methods

On behalf of Attwaters Jameson Hill posted in Dispute Resolution on Monday, May 4th, 2020

While the government says that most landlords and tenants are working well together to find mutually suitable solutions during the coronavirus lockdown, landlords have continued to exercise rent collection methods with a view to ensuring that rent continues to be paid.

To help High Street businesses get through the lockdown period, the government has introduced changes to temporarily prevent a number of rent collection methods.

Preventing a deeper financial impact

The government has put a temporary ban on the use of two practices normally used when a business has failed to pay its rent or bills:

  1. Statutory demands – the government has banned the use of statutory demands, starting from those issued on 1 March 2020 and ending on 30 June 2020.
  • Winding up petitions – the government has temporarily prohibited the issuing of winding up petitions, starting from Monday 27 April and again ending on 30 June 2020, for businesses affected by coronavirus. During this period, any winding up petition that claims a company is unable to pay its debts must first be reviewed. No petitions will be able to be presented if the review demonstrates that the company’s inability to pay is directly attributable to COVID-19.

These measures have been included in the Corporate Insolvency and Governance Bill.

“Breathing room” for tenants

Further legislation to prevent landlords from using Commercial Rent Arrears Recovery (CRAR) unless they are owed at least 90 days’ rent (as opposed to the normal seven days) is also hoped to save High Street retailers from permanent closure. However, in recognition of the strain on commercial landlords at this difficult time, the government has urged tenants to pay their rent if they can afford it, or at least as much as they can.

Expert Dispute Resolution lawyers

While the legislation has been welcomed by bodies representing the retail sector, it is only a temporary reprieve. Once the measures are lifted, it is likely that commercial landlords will consider the rent collection options available with a view to recouping their losses.  

Whether you are a tenant being pursued for rent arrears, or a commercial landlord struggling with a lack of rental income, our Commercial Dispute Resolution team can help. We understand that both parties will be experiencing financial difficulties through no fault of their own, and will endeavour to come to an agreement that satisfies both parties. To get in touch, just call Prabhi Ghura on 0203 871 0017 or email prabhi.ghura@attwaters.co.uk.

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