The Confederation of British Industry (CBI) has sought another six month's protection for coronavirus-hit firms from being evicted for not paying rent. The organisation, which represents 190,000 businesses said firms which have to remain fully closed, or will continue to be heavily restricted and most in need, should get continued support, but they want the blanket evictions ban to be lifted for businesses.
CBI Chief UK Policy Director Matthew Fell said: “The blanket government protections for non-payment of commercial rents should be lifted. While some sectors remain heavily restricted or fully closed, ongoing protections should be targeted towards the firms most at risk in these sectors."
The six month extension proposed by the CBI would apply to fims that can demonstrate lockdown-related falls in revenue of more than 30 per cent. They believe the majority of tenants would be able to pay full market rent from June 30, when the current protections end. In their policy paper they recognised that a small minority of firms had used the pandemic protections to withhold rent and avoid negotiating with landlords altogether.
Although businesses were given government support through furlough and grants, in many cases it has not been enough to pay the rent and huge debts have accumulated. It is estimated the UK wide bill for unpaid rent is about £5 billion. Nightclubs and late night venues, which have had to shut their doors continuously for 14 months, are lobbying the government for an extension to the commercial evictions ban.
Legal protection for businesses unable to pay rent was introduced in the Coronavirus Act 2020 and has been extended once already, but ends in four weeks time. Some business owners fear landlords will issue eviction notices and take legal action as soon the official protection runs out. On debt and rent arrears, Fell said: “The conversation about commercial rent debt needs to be dealt with separately. There is a huge deficit in unpaid commercial rents, which both tenants and landlords acknowledge is unlikely to be fully recovered.
“The majority of tenants and landlords have already come together for adult-to-adult conversations to settle commercial rent arrears; those businesses yet to enter into negotiations should now do so and work hard to reach an agreement, or risk court decisions that may be less favourable.”
The Ministry of Housing, Communities and Local Government is working on plans for a post-June 30 arrangement between tennants and landlords and will make an announcement in the next couple of weeks. The CBI paper on how businesses should be protected post June 30 suggests separating rent arrears from March 2020 to 23 June 2021 from future rent arrangements between the tenant and landlord, protecting against statutory demands for payment and using the Commercial Rent Arrears Recovery scheme until the end of the year.
