Government moves to prevent aggressive rent collection and closure

People walk past shops and retailers in the town centre of Yeovil on February 2, 2017 in Somerset, England. (Photo by Matt Cardy/Getty Images)

The government said it will introduce new measures to protect high street shops and other companies from aggressive rent collection during the coronavirus pandemic.

Noting reports of aggressive debt recovery tactics employed by some landlords, Business Secretary Alok Sharma on Thursday (23 April) said he is taking steps to stop these unfair practices.

“I know that like all businesses [commercial landlords] are under pressure, but I would urge them 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 said.

The government will temporarily ban the use of statutory demands and winding up orders where a company cannot pay their bills due to coronavirus. This measure will be included in the Corporate Insolvency and Governance Bill, which the business secretary has set out earlier this month.

The government also plans secondary legislation to prevent landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent. Earlier, the government has declared a moratorium on evictions for commercial tenants for at least a three-month period as part of its business support measures.

The new legislation will be in force until 30 June, and can be extended in line with the moratorium on commercial lease forfeiture.

The government also called on tenants to pay rent where they can afford it or what they can in recognition of the strains felt by commercial landlords.

Sharma said the landlords can seek help through the business support package announced by the government, including the recently expanded Coronavirus Business Interruption Loans Scheme.

Commenting on the measures, James Lowman, chief executive of the Association of Convenience Stores, said it will give a “breathing space” for local shops.

“We welcome action from the government to support local shops with more breathing space to pay bills and avoid aggressive debt recovery methods during the COVID-19 outbreak. This is especially relevant to local shops trading in city centres and transport hubs that have seen the biggest decline in trade and may be struggling,” he said.

Helen Dickinson, chief executive of the British Retail Consortium, also welcomed the move.

“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,” she said. “We look forward to the finer details, however it is clear government is listening and willing to act.”