Legislation has been proposed to ring-fence outstanding unpaid rent that has built up when a business has had to remain closed during the pandemic. Landlords are expected to make allowances for these ring-fenced rent arrears and share the financial impact with their tenants.
The legislation is intended to help tenants and landlords work together to come to an agreement on how to handle the money owed. This could be done by waiving some of the total amount or agreeing a longer-term repayment plan. However, this does require both parties to be proactive and enter into correspondence with each other.
This agreement should be between the tenant and landlord and, if in some cases an agreement cannot be made, the law will ensure a binding arbitration process will be put in place so that both parties can come to a formal agreement. This will be a legally binding agreement to which both parties must adhere.
In order to ensure landlords are protected, the government is making it clear that businesses who are able to pay rent, must do so. Tenants should start paying their rent as soon as restrictions change and they are given the green light to open.
The existing measures in place to protect commercial tenants from eviction have also been extended to 25 March 2022. This is intended to ensure that the sectors which are unable to open have enough time to come to an agreement with their landlord without the threat of eviction.
Whilst this legislation will hopefully provide support to those sectors in most need, it may also be a double edged sword. For every tenant in financial difficulty there is a landlord who may also be struggling financially. The need for all parties to be proactive and enter into early correspondence remains key.
For more information about the RPG incorporating Crawfords Business Recovery team and our insolvency and recovery services which are personalised to suit your needs, please contact Gareth Hunt or another member of the Business Recovery team. Email info@rpg.co.uk See more details here https://rpg.co.uk/rpg-insolvency/
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