Lease forfeiture moratorium extended as Government sets out Code of Practice

The lease forfeiture moratorium, which was introduced in March and prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic, had been due to expire on 30 June.

In the last few weeks, however, the Government has faced extensive calls from trade bodies​​ and voices within the industry​​ to renew the protections, as failure to do so would have meant many businesses faced evictions, winding up orders and other enforcement activity.

The extension comes as the Government prepares to publish its Code of Practice on commercial leases impacted by Coronavirus pandemic. 

The voluntary code encourages tenants to pay rent in full where they can, but also acknowledges that landlords should provide support to those businesses unable to do so.

It has been developed with input from leaders in the retail, hospitality and property sectors, including industry trade body UKHospitality, and has been designed to provide clarity for businesses when discussing rental payments and to encourage best practice so that all parties are supported.

“The hospitality sector has seen its income almost totally wiped out by this crisis and therefore businesses simply cannot meet their rent obligations," says UKHospitality chief executive Kate Nicholls.

"Although the majority of landlords have been pragmatic, a minority have aggressively pursued tenants that have been closed for months and no ability to pay.

“This code goes some way to bringing together landlords and tenants in the pursuit of a negotiated solution to allow hospitality businesses to move on and revert to the new normal, but this must be recognised as a first step that needs to be built on by all parties"

UKHospitality says it has called on the Government to consider extending the lease forfeiture moratorium even further, so as to allow businesses time to assess the state of the sector’s recovery.

It has also reiterated the need for Government financial intervention to provide support to bridge the gap between landlords and hospitality tenants, who have been closed for months with virtually no income to pay their rents.

“Further time and support is needed to facilitate a recovery for the hospitality sector, that is at the heart of our social lives and communities," adds Nicholls.

"The moratorium should be extended until the end of the year to keep businesses alive and allow the code to support negotiations to find a solution.

“The reality is that we are now at a point where fiscal support is going to be needed in many cases. It is now the only option if we want to avoid widespread business failures. The Government must consider supporting hospitality businesses who cannot pay rent.”

Other voices from the sector also suggest more needs to be done by the Government to support businesses in the long term.

Hospitality Union's Jonathan Downey has been campaigning for a #NationalTimeOut on rent deals for the sector since April, and recently published a revised proposal​​ that calls for a rent-free period for hospitality businesses while they remain close, which moves to a turnover rent once they reopen.

"This will give some of us more time to negotiate rent-free, turnover rent and other fair deals with reasonable landlords," says Downey, responding to today's developments.

"For others, it just delays the inevitable. Six months without having to pay rent is very helpful, but we’ve been locked down for four of them.

"We’ll keep campaigning for a national solution on rents because the Code of Conduct isn’t it."