Responding to the Government's Call for Evidence on what to do once the moratorium on landlord rent debt enforcement ends on 30 June, the BRC has written to Ministers to set out a plan that seeks to resolve the significant problem of commercial rent arrears.
Remit Consulting estimates that there is around £2.8bn of retail rent arrears - half the total from all commercial tenants - from the past 12 months. These have built up as rents are still legally due in full, even though non-essential stores have been closed and people asked to stay at home, resulting in huge falls in sales for retailers.
The BRC's proposal is:
- To ringfence any arrears built up during the current moratorium (24 March 2020 to 30 June 2021) and maintain existing protections against enforcement for these
- To include protection against County Court Judgements as part of this ringfence - landlords are increasingly using this mechanism, which has not been banned, to evade the letter and the spirit of the moratorium
- To extend the ringfence protection until 31 December 2021, by which time, if no agreement on how to deal with outstanding arrears has been reached between landlords and tenants, they will have to go to binding adjudication
- Adjudication would be on the basis of the Government's Code of Practice for Commercial Properties
- The protection against debt enforcement for arrears built up between 24 March 2020 and 30 June 2021 would continue until the sooner of either: landlord and tenant agreement; or a decision reached through adjudication
This proposal could be implemented at very limited cost to the Government, with only the cost of adjudication needing to be met. Legislation would be required but as there is a great deal of support for this broad approach across both landlords and tenants, this could be achieved reasonably straightforwardly.