Business Rate Review

Government extends eviction protection after delay in lockdown easing

Authored by Lisa Hogg

Lisa Hogg

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Approximate read time: 3 minutes

With the recent announcement of the delay to lockdown easing, the government has extended its limitations on winding-up petitions (WUP) and statutory demands. Additional measures have also been announced to protect businesses affected by the latest delay.

Bump in the roadmap

While the country expected the government to end coronavirus-related restrictions on June 21st, 2021, a rise in cases caused by the Delta variant led to this final easing being delayed until July 19th. The delay meant a lot of businesses, particularly those in the hospitality industry, including nightclubs and other venues, who were counting the days until they could reopen, must hang on longer before customers can return.

Protection for businesses and landlords

To assist those businesses that must remain closed for the delay’s duration, the government announced that outstanding rent arrears accrued during lockdowns are to be ringfenced for those businesses unable to reopen. Landlords are expected to make allowances in these cases.

This ringfencing is designed to help landlords come to an agreement with their tenants on how best to handle the money they’re owed. If the two parties cannot reach an agreement, it will result in a legally binding arbitration agreement. Private arbitrators will oversee this process.

Businesses who can pay rent, must, so that landlords are not left out of pocket, with repayments starting as soon as restrictions ease, and they can reopen.

Rent accumulated before March 2020 and after the date restrictions were lifted that would allow the business to operate will still need paying, and landlords are allowed to action those debts.

Extensions to existing protections

While none of the government’s coronavirus support schemes have been extended, measures to protect tenants from eviction will now last until March 25th, 2022. Additionally, restrictions on statutory demands and winding-up petitions will last another three months.

While the ringfencing will only apply to businesses affected by the latest delay to lockdown easing, the extension to the limits on winding-up petitions and statutory demands apply to all UK businesses.

When announcing the changes, Communities Secretary Robert Jenrick said:

“This special scheme reflects the unprecedented nature of the pandemic and responds to the unique challenges faced by some businesses. It strikes the right balance between protecting landlords while also helping businesses most in need, so they are able to reopen when it is safe to do so.

“They will ensure many viable businesses can continue to operate and debts accrued as a result of the pandemic are resolved to mutual benefit swiftly. The government has committed £350 billion to keep businesses running, people in jobs and ensure we can build back better from the pandemic.”

Summary

The roadmap out of lockdown has been delayed until July 19th, 2021. Businesses affected by this delay, like those in the hospitality sector, will receive additional help through the ringfencing of accrued rent arrears. The newest measures are designed to give businesses and their landlords time to reach a formal repayment arrangement. While the government has not extended its coronavirus support schemes, they have extended the suspension of winding-up petitions and statutory demands.

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