The retail sector has suffered considerably as a result of the coronavirus pandemic for obvious reasons; retail outlets without the capacity for online selling even more so. The Business Secretary has offered assistance in the shape of a bar on the use of aggressive rent collection methods by landlords, such as statutory demands and winding up petitions, which are temporary voided by changes made to the use of Commercial Rent Arrears Recovery by amendments included in the Corporate Insolvency and Governance Bill.

Alok Sharma, the Business Secretary commented: “in this exceptional time for the UK, it is vital that we ensure businesses are kept afloat so that they can continue to provide the jobs our economy needs beyond the coronavirus pandemic. Our unprecedented package of support can help commercial landlords, including through the recent expansion of the Coronavirus Business Interruption Loans Scheme. I know that like all businesses they are under pressure, but I would urge them to show forbearance to their tenants. I am also taking steps to ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the COVID-19 emergency continues. The temporary emergency measures are designed to acknowledge the pressures landlords are facing while encouraging cooperation in the spirit of fair commercial practice. They also come on top of a substantial package of business support measures, including a moratorium on evictions for commercial tenants for at least a three month period.”

Under these measures, any winding-up petition that claims that the company is unable to pay its debts will be compulsorily be reviewed by the court to determine why. The law states that it will expressly not permit petitions to be presented, or winding-up orders made, where it is apparent that the company’s inability to pay is the result of coronavirus. It is understood that the new emergency legislation to protect retail outlets and other tenants will be in force at least until 30 June and should the need arise it can be extended in accordance with the moratorium on commercial lease forfeiture.

The majority of landlords are already working with their tenants during these extraordinary times and are reaching arrangements whereby the tenants are paying what they can towards their rent, which assists both the retail outlet and themselves in that a tenant who can pay some part of the rent is far better than no tenant and the prospect of a considerable unlet period. Legal Law Limited’s corporate and commercial lawyers caution that these measures, whilst they are most welcome to the retail sector, are not without potential consequences. The head landlords of large retail estates frequently attract pension fund investment and the knock-on effect will be reduced returns. It is to be hoped that the Communities Secretary, whose comments are noted below, will be able to find an acceptable path for all parties.

Helen Dickinson OBE, the CEO of the British Retail Consortium commented: “rents are a huge burden for retailers that must be paid even where shops are closed. We have raised this problem with government and the announcement protects firms who – during these extraordinary times – are unable to meet their rent obligations. We thank Alok Sharma for his swift action, which will give retailers some vital relief and help safeguard millions of jobs all across the country.”

However, the Communities Secretary, Robert Jenrick, pointed out: “we understand that landlords are facing their own very serious pressures and are concerned about their position with lenders. We are working with banks and investors to seek ways to address these issues and guide the whole sector through the pandemic.”