Fears are growing about the financial health of some of Britain’s biggest landlords after the government extended a ban on commercial evictions to next year.
The moratorium, which was first introduced at the start of the pandemic last March, was designed to help businesses survive the crisis and the plan to extend it to next March was welcomed today by the hospitality and retail industries.
Yet the move will pile further pressure on property companies that are already labouring under billions of pounds in rent arrears.
James Raynor, chief executive of the British and Irish arm of Grosvenor, the property group, said: “I find it astonishing that one whole industry is being targeted by government intervention in this way and being deprived of their rights under the law. Owners and occupiers clearly need to work together in sensible partnership. I don’t see this helping, sadly.”
The extension was also criticised by Melanie Leech, head of the British Property Federation, who said: “The government has failed to recognise that commercial property owners are essential to the health of our town centres.”
She added: “Another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support and will cast a long shadow over investment to build back better.”
The moratorium prohibits landlords from taking legal action to recover rents from commercial tenants and had already been extended a number of times by the government. It had been due to expire at the end of this month but Steve Barclay, chief secretary to the Treasury, told the Commons today it would continue until March 25 next year.
He said the nine-month extension struck “the right balance” between protecting landlords and helping businesses in need but also added: “To be clear, all tenants should start to pay rent again in accordance with the terms of their lease, or as otherwise agreed with their landlord, as soon as restrictions are removed on their sector if they are not already doing so.”
He said the government would introduce an arbitration system to resolve disputes between landlords and commercial tenants over unpaid debts caused by the crisis.
Shares in Hammerson, the struggling shopping centres group that is behind Cabot Circus in Bristol and the Bullring in Birmingham, dropped 3.9 per cent to 39¾p, while Capital & Counties, the owner of Covent Garden in central London, fell by 0.4 per cent to 170p.
The measures are a fillip for retailers, restaurants and bars, which have been hit hard by coronavirus lockdowns. Helen Dickinson, head of the British Retail Consortium, said the extension had come “in the nick of time” and that shops “need time to trade their way out of debt”.
She said: “Just as retailers feared a wave of legal action by landlords, the government has stepped in to offer both landlords and tenants more time to negotiate.
Mike Cherry, national chairman of the Federation of Small Businesses, said the extension was a “big relief” for tenants who in many cases “were two weeks away from facing legal proceedings for rent they could not afford”.