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Commercial Property Eviction Ban

Some more unwelcome news for commercial landlords. The UK government has announced Commercial landlords will be unable to evict their tenants for unpaid rent for another nine months.

This is time some landlords don’t have as creditor’s mainly lenders lean on them to repay the mortgage arrears.

Some commercial landlords are already nursing up to 12 months’ rent arrears. This further ban on eviction of commercial tenants in some cases will mean even more rent arrears.

That’s another 9 months of rent arrears on top of the existing rent arrears.

The ban on eviction was due to end at the end of this month. This new regulation is extended into next year and means that tenants will not face court action for unpaid rent.

One landlord Mr Tom Hammily of Guildford, said: “Commercial landlords feel helpless when the very tools in law like enforcement action are taken away from us by the government.”

“My tenants have traded right through COVID-19 and seen a huge increase in business as consequences on COVID-19.”

“However, they feel they have protection from the government not to pay the rent arrears, so they are not paying the rent arrears.” He said.

This latest announcement was made following the previous extension of lockdown restrictions, which were due to be vacated next week. However, the official line is this is being extended following a rise in Covid-19 infection numbers in England.

One does wonder if the government will re-introduce the ban on eviction for residential property evictions?

The BBC reported that the retail and hospitality businesses have amassed £5bn in rental debt during the COVID-19 pandemic.

Treasury Secretary Stephen Barclay told the Commons the “current moratorium to protect commercial tenants from eviction” will end on 25 March 2022.

Plans were also announced for a binding arbitration scheme to resolve disputes between landlords and commercial tenants. Which is intended to be in place when the moratorium closes next year.

Mr Barclay said the scheme would “strike the right balance” in protecting landlords while supporting companies in need.

He further stated that commercial tenants should resume paying rent as soon as “restrictions are removed on their sector if they are not already doing so”.

There has been considerable discussion over how many companies have ceased to pay rent without good reason since the start of the pandemic last year.

Although some businesses have remained open, others have been closed for more than a year and have seen their turnover badly affected.

The ban on evicting commercial tenants was first introduced in April 2020 to assist businesses with the impact of the pandemic.

Landlords are restricted from using the statutory demand petition for payment of rent when managing commercial properties.

Mental health crisis & COVID-19

Mental health crisis due to COVID-19 has meant the government is introducing breathing space measures for tenants with rent arrears debt.

Some landlords feel it’s time to sell their commercial property. However, with substantial rents, outstanding commercial property prices are not as strong as in the residential sector.

During part of the coronavirus pandemic, the stamp duty holiday has not helped any of the commercial landlords in financial difficulty due to tenants rent arrears.

Even if some landlords could evict their tenant, rel-letting some commercial property may not be that easy.

This means you have the additional financial burden of paying the full business rates and, in some cases, service charges on the empty premises.

Some landlords are using the rent deposit as a way to partially deal with the payment of rent.

A landlord who is a British Landlord Association members can seek free legal advice or contact a debt advice provider.

The Coronavirus pandemic has wreaked havoc on the property sector for tenants, landlords alike, and the mental health crisis is a serious challenge.

While commercial tenants have legal protection and access to free legal advice, breathing space landlords have no support from the government.

Mr Sajjad Ahmad, the British Landlord Association CEO, said: “It is crucial and urgent that the government look to financially supporting landlords. This will help the wider economy too”.

What will happen to the property prices in 2021?

The UK government has pumped billions of pounds into the economy and several schemes to stimulate the economy and the property sector.

As soon as these stop and the schemes come to an end. The property market is likely to fall.

What’s in store for the UK property sector in 2021?

The commercial property sector is in trouble already.

Extending the eviction ban will only mean the fall is likely to worsen when it comes.

2021 is expected to see the property prices remain stable. 2022 is likely going to be challenging for property prices.

How does the Breathing Space scheme work?

There is a process to follow; you can read our blog on the process.

How could Breathing Space help me deal with my debts?

It will give you time to come to some arrangement with the creditor.

How can a “breathing space” be set up?

There is a process to follow and requirements for anyone to be able to use this. Read our blog to have an in-depth understanding of the breathing space process.

Who can apply for Breathing Space?

There is a requirement and a process to follow to access breathing space protection. Read our blog on this subject.

What cost has coronavirus had on commercial property in the UK?

This is unknown and the coronavirus pandemic is still an issue we are unlikely to know the full impact and cost to our economy.

Property Investors Going to See Great Depression Repeat?

As the whole world goes into a financial downturn, it has the making of a great depression like of the 1920s.

The commercial property after Covid – opportunity or trap?

It depends on the location, type of commercial property and the quality of the tenant.

If you lose your tenant and the property is empty, you have to service the mortgage and full business rates—it then is a financial trap.

What is commercial property?

Commercial property is a property that is not residential. Commercial property is like a retail shop, office, garage warehouse etc.

The British Landlords Association is a free national landlords association for commercial & residential landlords. Join now for free membership!

Author: Amanda Goldsmith [email protected]

British Landlords Association