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Eviction uncertainty set to continue

23rd December 2021

Eviction uncertainty set to continue

Raj Chohan, a Trainee Solicitor in the Property team at Higgs LLP, investigates the implications of the extension of restrictions on commercial evictions for tenants and landlords alike.

As in many walks of life, the pandemic has produced an unprecedented response when it comes to commercial evictions.

The introduction of a series of measures placing restrictions on evictions and enforcement procedures dominated the landscape in 2021, and that is unlikely to change in the first half of the new year at least.

Back in July, the government announced an extension to the restrictions on commercial evictions until March 25 2022, as well as limiting enforcement procedures such as the Commercial Rent Arrears Recovery process.

There are currently estimated rent arrears of £1.7 billion, of which 80% is attributed to the retail and hospitality sector.

To tackle this, the government introduced a new code of practice in November and intends to introduce the Commercial Rent (Coronavirus) Bill in March.

The result of these measures is commercial tenants have an additional shield of protection around them at the end of the enforcement moratorium, and commercial landlords must continue to be wary of the implications of any enforcement actions made against their tenants.

How can this help commercial tenants?

The new code of practice provides tenants with a strong negotiating position and landlords will be expected to waive some, or all, rent arrears where practical.

Where tenants are able to pay, they must do so without undue delay, and both parties must strike a balance between the tenant’s business viability and the landlord’s solvency.

In instances where no agreement can be reached, the Bill due to be introduced in March will establish an arbitration process. Assuming the Bill is passed, any County Court Judgement from November 10 to the date the new laws are passed will be permitted to be stayed and reverted to the arbitration process of the Bill.

Any statutory demand or claim for bankruptcy between 10 November 2021 and the date of the Bill coming into force will be considered void if appealed.

What can commercial tenants do now?

The best course of action for tenants experiencing financial difficulties due to ongoing restrictions would be to open dialogue with their landlords. This will help minimise the need for legal proceedings and associated costs.

To enter these conversations in the strongest position possible, it would be beneficial for a tenant to have a clear understanding of the projected cashflow of their business over the festive period and leading into the new year to ensure any negotiations are happening against a backdrop of an accurate and solid commercial footing.

What can commercial landlords do now?

Once again, open and honest dialogue is key to a successful conclusion and avoiding any future legal costs.

Given the current protection offered to tenants, the landlord would be advised to approach discussions with a degree of flexibility.

 How can Higgs LLP help?

We are able to assist either commercial tenants or commercial landlords in dealing with rent arrears.

We can provide support on:

  • Property litigation: understanding your business’s commercial goals, advising on your potential financial exposure and aiding in the negotiation of rent payment for rent arrears. Our property litigation team can also provide tailored strategy and support should a matter result in litigation.
  • Dispute resolution: providing support at the arbitration stage with an emphasis on settlement to avoid unwanted legal costs.
  • Corporate: aiding businesses in corporate restructuring to meet commercial needs.
  • Debt recovery: supporting landlords in claims for rent arrears.
  • Property insolvency: providing support in these matters and protecting your interests at all times.

 

To contact the Higgs LLP Commercial Property or Dispute Resolution team, please ring 0345 111 5050 or e-mail law@higgsllp.co.uk

 

 

 

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