Industry dismay as government extends evictions ban

The property industry is reeling from the government’s decision to extend the moratorium on commercial tenant evictions to March 2022, with leading figures highlighting its failure to understand the impact that a blanket extension will have on both real estate and the wider economy. The moratorium on evictions was initially set to expire at the end of this month. However, Steve Barclay, chief secretary to the Treasury, told the Commons this week that it will now continue to March rent day next year. Legislation to support the “orderly resolution” of debts accrued from pandemic closures will be introduced. This will involve a new binding arbitration scheme as a “backstop” to help resolve disputes between landlords and occupiers, if their negotiations fail. While industry leaders have welcomed proposals for ring-fencing accrued rent arrears for vulnerable tenants, and for mandatory binding arbitration, they expressed major concerns that the lengthy extension will continue to allow some well-capitalised retailers to exploit the moratorium. ‘There is no justification for delay’ James Raynor, chief executive of Grosvenor Britain & Ireland, said it was “astonishing that one whole industry is being targeted by government intervention in this way and being deprived of their rights under the law”. “Owners and occupiers clearly need to work together in sensible partnership,” Raynor wrote in a social media post. “I don’t see this helping, sadly.” Landsec chief executive Mark Allan and British Land chief executive Simon Carter jointly stated that they are “disappointed with the timetable that has been set to withdraw the moratorium, which has enabled a minority of well-capitalised businesses to withhold rent and divert investment from our high streets”. “If our sector is to contribute meaningfully to the UK’s economic recovery, it’s vital that the government now prioritises the required legislation to withdraw the moratorium as soon as possible and return the market to normal operations,” said the pair. The duo previously teamed up on urging the government to lift the moratorium while ring-fencing rent arrears. Melanie Leech, chief executive of the British Property Federation, criticised the government for failing “to recognise that commercial property owners are essential to the health of our town centres”. She added that “there is no justification for delay”. “Most businesses are now open and trading, and the legislation required to focus protection on the most vulnerable, and to create a clear exit path to deal with rent arrears, should have been put in place for the end of this month when the moratoriums are due to expire,” said Leech. “Instead, another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support and will cast a long shadow over future investment to build back better.” Delaying the inevitable Bruce Dear, head of London real estate at Eversheds Sutherland, said it was “seismic news” for the industry. “Among much else, it strongly suggests that the government expects a very difficult winter,” he wrote on Twitter. Paul Burton, real estate partner at JMW Solicitors, said the extension in many cases “only delays the inevitable”. “It’s unlikely in itself to save the occupier but could cause terminal damage to the landlord,” he said. “It’s a classic ‘kicking the can down the road’ situation.” Burton added: “The moratorium also fails to differentiate between alternate types of businesses and tenants – or turnover – and could therefore lead to a power imbalance between smaller landlords and bigger tenants who have thrived during lockdown. We’re likely to see landlords struggling to service debt and suffering serious cash flow issues as a result. “Landlords will also be unable to seek the recovery of any debts or take actions usually available to them until the period ends – even then, they may well be left with a tenant that isn’t worth suing, or has already suffered an insolvency event.” Alison Hardy, dispute resolution partner at law firm Ashurst, said the decision represents “yet another blow” for property owners. “We wait to see whether tenants will comply with the suggestion that they should start to pay rent again in accordance with their lease,” said Hardy. “We also await the detail of the proposed binding arbitration. The landlord waiting game continues.”   To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews