The majority of landlords and tenants are working well together to reach agreements on debt obligations, but some landlords have been putting tenants under undue pressure by using aggressive debt recovery tactics.
New coronavirus measures to stop aggressive rent collection practices
To stop these unfair practices, the Government will temporarily ban the use of statutory demands (made between 1st March 2020 and 30th June 2020) and winding up petitions presented from Monday 27th April, through to 30th June, where a company cannot pay its bills due to the coronavirus. The measures will be included in the Corporate Insolvency and Governance Bill.
The Government is also introducing secondary legislation to provide tenants with more breathing space to pay rent by preventing landlords from using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days or more of unpaid rent.
While landlords are urged to give their tenants the breathing space needed, the Government calls on tenants to pay rent where they can afford it or what they can in recognition of the strains felt by commercial landlords too.
Under these measures, any winding-up petition that claims that the company is unable to pay its debts must first be reviewed by the Court to determine why. The law will not permit petitions to be presented, or winding-up orders made, where the company’s inability to pay is the result of COVID-19.
The new legislation to protect tenants will be in force until 30th June and can be extended in line with the moratorium on commercial lease forfeiture.
Further commentary is to be issued once the legislation is introduced.
How can Nelsons help?
Paul Hinchliffe is a Parnter in our expert Commercial Property team.
If you have any queries relating to the new coronavirus measures to stop aggressive rent collection practices, please contact Paul or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.